Steve Jobs' Bold Move: Ditching IBM for Intel in a Battle for the Living Room

Strategic Insights -

Silicon Valley was abuzz last week with the news that Apple would be ending its 14-year association with IBM to switch to Intel microprocessors. The move was a surprise to many, but not to those familiar with Apple's history of innovation and its desire to disrupt the status quo. At the heart of the decision was a desire to challenge Microsoft's Xbox 360 and Sony's PlayStation 3, which are as much internet-enabled home media and entertainment centers as they are games consoles.

Key Takeaways:

  • Apple's decision to switch from IBM to Intel microprocessors was a canny business move, driven by the need to keep up with market demand and prevent its PowerBooks and iBooks from falling behind.
  • The move is also seen as a response to the growing threat of Xbox 360 and PlayStation 3, which use PowerPC technology and are beginning to encroach on Apple's territory in the living room.
  • The Intel transition will allow Apple to run both Windows and Mac OS on the same machine, potentially accelerating the shift from PCs to Macs among consumers.
  • With the iPod-driven success of the Mac, Apple is well-positioned to take on the rising challenge from Microsoft and Sony in the home entertainment market.
  • Developers are eagerly anticipating the potential of Mac OS on Intel, with Scott Love of AquaMinds predicting that software will be able to work on both IBM and Intel-based computers.

Statistics:

  • Apple's PowerBooks and iBooks account for more than 30% of the company's personal computer revenue.
  • The Xbox 360 and PlayStation 3 have already begun to encroach on Apple's territory in the living room, with both using PowerPC technology.
  • Intel is keen to keep its place in the enormous home entertainment market, and sees Apple as a prime candidate to take on the research and development burden.
  • The global home entertainment market is expected to expand significantly in the coming years, with broadband internet and video-on-demand driving demand for devices that can play games, music, and video.

Sources:

  • The Wall Street Journal: Walt Mossberg's report on the IBM-Apple split
  • The New York Times: John Markoff's analysis of Apple's decision to switch to Intel
  • AquaMinds: Scott Love's comments on the potential of Mac OS on Intel
  • The Global Business Network: Peter Schwartz's observation of Apple's counterculture approach to business