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Apple switches to Intel chips

Apple Computer Inc CEO Steve Jobs announces it will discontinue using microprocessor chips made by IBM in favor of Intel chips at Apple's Worldwide Developers Conference in San Francisco on Monday. PHOTO: AP

Steven Jobs took the stage at Apple Computer's Worldwide Developer Conference on Monday to tell more than 3,000 of his most enthusiastic fans -- and occasionally also his harshest critics -- that he was giving them a new homework assignment: to rework their Macintosh programs to run on chips from Intel.

Apple's decision to shift the Mac microprocessor business to Intel, a longtime rival, after more than a decade with IBM was the latest bold maneuver in his eight years back at the Apple helm, a period in which he has reinvigorated the Macintosh line and overseen Apple's ascendancy in the digital music business.

Jobs said the company would begin incorporating Intel chips in some Macs reaching the market next year and largely complete the changeover by 2007. For the transition, Apple will offer a new version of its operating system, Macintosh OS X Tiger, that will run on both IBM and Intel chips.

One immediate challenge will be to persuade his customers to continue to buy Mac computers based on IBM's PowerPC chip while they wait for the Intel versions to arrive. But in an interview after his presentation on Monday, Jobs said he believed that Apple would be able to navigate around that obstacle.

To hear Jobs describe it, the switch was a logical and straightforward business decision.

"It didn't feel to me like a long march," he said, describing a moment several months ago when he realized he would end his relationship with IBM He said it was an obvious decision for his small team of top managers. "There was a day when we looked at each other and said, `this is the right thing to do.'"

Indeed, it was a contingency he had been preparing for since he returned to Apple, he told the developers on Monday. He showed a satellite map of Apple's corporate headquarters and pinpointed the building where a secret engineering project, code-named Marklar, had been tuning Apple's software on Intel-powered computers bought off the shelf.

"Macintosh OS X has been leading a secret double life for the past five years," he said.

Apple had been counting on a version of the PowerPC processor that required less power and produced less heat, but had not gotten one from IBM and its partner, Freescale Semiconductor. In addition, several analysts said they believed that IBM had refused Apple demands for deep discounts.

No financial details of the Apple-Intel deal were disclosed.

Several analysts said Monday that they were skeptical of such claims.

"We're not sure about whether Intel is that much better than AMD or IBM," said Richard Doherty, president of the Envisioneering Group, a consulting firm in Seaford, New York. The key factor in the deal was probably price, he said.

If outsiders are not true believers, however, Intel is. At the event Monday at the Moscone Convention Center, Paul Otellini, Intel's chief executive, gave Jobs a bear hug and said his company held no grudges for earlier Apple television advertisements that poked fun at Intel's Pentium processor chips.

Moreover, Otellini was blunt in pointing out that although Apple's chip purchases might not make a significant contribution to his company's income statement, Intel was eager to move its technical innovations to market more quickly.

"It's a chance to reignite innovation," he said.

Indeed, despite Apple's small share of the personal computer market, the Intel-Apple partnership could affect the balance in the industry, providing Intel's labs with a channel beyond the Windows world of Microsoft -- a longtime partner with which it has periodically clashed over competing technologies.

In his presentation Monday, Jobs painted a picture of a smooth technical transition from IBM to Intel chips. He mustered support from two key Macintosh software developers, Microsoft and Adobe, whose executives said they were eager to move their programs to Apple's new computers.

Al Gillen, research director at IDC, a market research company, said he was skeptical that the transition would be as smooth as Apple portrayed.

"They have a history of pushing platforms that is fairly disruptive," Gillen said. He pointed to Apple's move from its original Motorola 68000-based systems to systems using the Power PC. Though Apple had promised the transition would be smooth for Mac users, "it was basically a `repurchase' operation," he said, requiring new software for those purchasing the new computers. "Their concept of `fairly easy' sometimes requires buying new things."

Jobs made it clear Monday that he had no plans to sell Apple software to run on Intel-powered Windows computers, although several analysts said that he would not be able to stop the re-engineering of Intel computers to make such use possible.
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