Apple and Intel, whats the real story?


It looks like there will be some announcement on Monday that relates to Apple and Intel. I've said in the past that there are only a few ways that Apple could ever switch to an Intel processor and I'd like to discuss the possibilities before the announcement.

The reports from C|Net regarding the announcement basically say that Jobs will move the entire line of Apple computers to x86 based processors, further there are reports that they will also be using AMD processors so that would imply that it is not a custom Intel processor. This could actually mean a number of different things dependent on how things might play out. One of the things that Apple must do business-wise is ensure that revenues aren't drastically impacted by whatever announcement they make in the short term. I have said in the past that Apple could make a move like this once their iPod business dwarfed their Mac business from a revenue perspective, however I think it is premature to say that is the case. This reduces the number of possible scenarios I think. Here is the list that I have come up with:

1) Apple has taken its IP for the PPC and is handing it over to Intel to make a new chip for use in their computers. This would not jive with the reported x86 stuff, but would be the easiest transition for developers but the least likely to satisfy the hordes of x86 lovers.

2) Apple moves its entire line of computers to Intel processors in the next release of those systems. They are custom, Apple only hardware designs such that Mac OS X does not run on whitebox PC systems so they can retain stability and quality by reducing the hardware target.

3) Apple ships Mac OS X for whitebox PCs with certain hardware requirements while continuing to build high-end Apple branded hardware that meets those requirements. In this case they are still a PC manufacturer but compete directly with other PC manufacturers. Mac OS X is essentially free with their own hardware, while costs about the same as WinXP professional for other systems.

4) Apple has ported Mac OS X to whitebox PC systems that meet their requirements and is exiting the PC hardware business completely. They will produce designs that are labeled "Apple Approved" for third-party manufacturers to build and sell.

Let's look at each of these from a revenue and impact to developer perspective:

Scenario Analysis
ScenarioDeveloperBusiness
Intel PPC Near zero impact to developers, possibly some new accelerated APIs like SSE/SSE2 No change
Mac OS X86, no whitebox Developers must compile their code for PPC and x86 in the near term otherwise suffer emulation. Mac OS X support Fat binaries so distribution of this software is not a huge deal. Most of the truly great applications for the Mac are from Apple anyway, so we would assume that those all are quickly ported Revenue dips in the near term as people wait for the x86 machines to ship. Long term it could mean fewer people upgrade to Apple based systems as they may perceive fewer differentiators. I imagine people would illegally get Mac OS X running on whitebox machines in this scenario causing all kinds of problems.
Mac OS X86, whitebox support Similar to the above though there are many more consumers that could theoretically be using your application, thus you might want to port sooner rather than later. If this move were to increase Apple's marketshare significantly and their hardware remained high quality and distinguished from most whitebox manufacturers, like say the Thinkpad a few years ago, I could imagine them being revenue positive from this with the added revenue and higher margins of selling the OS for the huge installed base of compliant x86 systems.
Mac OS X86, exit hardware business Similar to the above developer impact Revenue would dip significantly in the short term without amazing deals with the major PC manufacturers. Long term this would open their platform to a huge number of consumers.

Which one would I like to see? My choice would be 3. If Apple were to become a high-end, high-quality PC manufacturer along with the best OS and application software provider for that platform I can see long legs to the Mac experience. The other reason I could see that as being the best option is that it would be much easier to ship Mac OS X for x86 in general than to ship it along with a new hardware platform at the same time. This would mean that the time to market would be significantly shorter and they could see revenue from that immediately, rather than in a year as some of the articles mention.

Posted: Sun - June 5, 2005 at 12:53 PM           |

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