Apple Dumps IBM Chips for Intel, Aiming for Faster, Cheaper Macs

In a major shift in its strategy, Apple has announced that it will be dropping IBM-manufactured chips used in its Macintosh products and switching to Intel processors. This move is expected to result in cheaper, faster, and more powerful machines, with analysts predicting that prices could be cut by between 10% and 20%. The switch is not without risks, however, as software developers will need to rewrite programs to work with the new processors.

Key Takeaways:

• Apple plans to move all of its flagship Macintosh computers to Intel processors by the end of 2007, as announced by Steve Jobs, the company's chief executive.
• The use of Intel chips could make Mac products more powerful, thinner, and cooler, with the potential to cut prices by between 10% and 20%.
• The switch to Intel processors may require software developers to rewrite programs, which could cost hundreds of millions of dollars and is considered "deep work at the base of the software kernel."
• Apple has seen significant success with its iPod digital music player, which has created a "halo" effect and contributed to the growth of its more traditional business.
• Mac sales increased by 43% in the first quarter, four times as fast as the industry, despite holding only 2.3% of the personal computer market.
• The company has launched the Mac Mini, a stripped-down version of the Macintosh for less than $500, in an attempt to broaden Apple's appeal.

Statistics:

• Apple plans to move to Intel processors by the end of 2007.
• Potential price reduction: 10% to 20%.
• Estimated cost of re-engineering software: hundreds of millions of dollars.
• Mac sales increase in the first quarter: 43%.
• Industry sales growth rate: one-tenth of Mac sales.

Sources:

• Apple Computer announcement
• Interview with Steve Jobs
• Analyst comments from Gartner research group
• Apple sales data