Apple Ditches IBM for Intel in a Bid for Digital Domination

Strategic Insights -

Apple's Steve Jobs is making a bold move by ending the company's 14-year relationship with IBM and partnering with Intel for its computer chip needs, sparking speculation about the company's future plans. The move could potentially place Apple in direct competition with Microsoft and Sony in the market for digital entertainment gear for the living room. With Intel's powerful 64-bit chips, Apple may be able to finally solve a long-standing perception problem and attract consumers who prefer the company's sleek designs but have stayed away due to the lack of Windows compatibility.

Key Takeaways:

  • Apple's decision to end its relationship with IBM and partner with Intel could potentially put the company in direct competition with Microsoft and Sony in the digital entertainment market.
  • Intel's 64-bit chips could solve Apple's long-standing perception problem and allow Mac users to run Windows-based games and software programs.
  • Jobs has promised a seamless transition from IBM to Intel, but analysts warn that Apple may suffer from the "Osborne effect" if customers stop buying IBM-based Macs and wait for Intel-based systems.
  • Jobs had rejected Sony's offer to adopt its Cell microprocessor, which is being developed by IBM for the PlayStation 3, in exchange for access to Sony technologies.
  • Intel is looking for ways to get its chips into devices that can compete with game consoles as living-room entertainment hubs.
  • The next-generation video game machines made by Microsoft, Nintendo, and Sony are based on IBM chips, and analysts say both Microsoft's Xbox 360 and the PlayStation 3 will be positioned as home digital media hubs.

Statistics:

  • 14 years: the length of Apple's relationship with IBM
  • 50: the age of Steve Jobs
  • 3 p.m. on June 3: the time at which Jobs informed IBM about Apple's negotiations with Intel
  • 3-gigahertz Macintosh: a promised product that Jobs was unable to deliver with the IBM partnership
  • 3-gigahertz Power PC: another promised product that Jobs was unable to deliver
  • 2007: the year in which Intel's power-conserving 64-bit chips will be available
  • 10% (estimated): the potential market share that Apple could gain by partnering with Intel

Sources:

  • "Welcome, IBM. Seriously." (Apple ad, 1997)
  • "Think Different" (Apple slogan)
  • Stephen Wozniak, co-founder of Apple
  • Steve Jobs, co-founder and CEO of Apple
  • Mark Stahlman, Wall Street analyst at Caris & Co.
  • Adam Osborne, computer pioneer
  • Peter Schwartz, chairman of the Global Business Network
  • Steve Lohr, reporter for The New York Times