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Source: The Wall Street Journal's ''Heard On The Street'' column
Apple Explores Use Of Chips From Intel For Macintosh Line
By DON CLARK and NICK WINGFIELD
Staff Reporters of THE WALL STREET JOURNAL
May 23, 2005; Page C1
Apple Computer Inc. has always blazed its own trail, a tack that has helped turn the company into a stock-market darling lately. But a pivotal step toward the mainstream could be in the offing.
The computer maker has been in talks that could lead to a decision soon to use Intel Corp. chips in its Macintosh computer line, industry executives say, a prospect that may shake up the world of computers and software.
The idea that Apple Computer might use Intel-based products, which provide processing power for personal computers that use Microsoft Corp. software, has long been the subject of industry speculation and off-and-on negotiations between Apple and Intel. Two industry executives with knowledge of recent discussions between the companies said Apple will agree to use Intel chips.
Neither company would confirm any change in their relationship. Nor is it clear, if Apple does proceed with plans to work with Intel, whether it will make a large-scale shift away from chips made by International Business Machines Corp., its longtime supplier. Talks between Apple and Intel could founder, as they have before, or Apple could be engaging in negotiations with Intel to gain leverage over IBM.
Still, Apple's consideration of Intel chips reflects what others in Silicon Valley see as a crescendo of commercial considerations for both companies. For Apple, which has struggled to expand beyond a tiny sliver of the PC market, adopting Intel chips would help ensure that future Macintosh systems meet the price and performance of products from tough rivals such as Dell Inc.
Macintosh users, for example, could benefit by getting access to Intel's power-saving chips for laptop computers and other new chips that offer the equivalent of two electronic brains on a single piece of silicon. Apple's pricing, which has often been higher than rivals, also could be more competitive -- particularly if Intel provides the kind of marketing subsidies it has given to other computer makers.
Using Intel chips also makes it at least theoretically possible that users could install Windows on Macintosh systems, though it is not clear that Apple will support software other than its Mac OS X operating system.
For Intel, already the dominant supplier of the calculating engines inside computers, winning Apple would be a prestigious endorsement from one of technology's most influential trend-setters. Under Steve Jobs, Apple's chief executive officer and co-founder, Apple has consistently delivered innovative hardware designs and blazed a trail in digital music.
Apple sells only about three million computers a year -- a small portion of the 200 million or so machines sold globally -- so a new relationship with Intel wouldn't increase that company's sales much. But Intel, which has long courted Apple, could benefit by an association with Apple and its hit iPod device, which may be luring more Windows PC users to consider Apple computer products. It could also continue the perception of momentum that has made Apple shares nearly quadruple since the iPod was introduced in October 2001...
...An Apple spokeswoman said she would characterize the possibility of adopting Intel chips "in the category of rumor and speculation."
Apple could choose to add some Intel-based models to its product line or make a complete shift to Intel's chip technology. The latter would be a serious blow to IBM's microprocessor business, though the big computer maker has had success in convincing Microsoft, Sony Corp. and Nintendo Co. to use PowerPC technology in their next-generation video machines. An IBM spokesman declined to comment...
Apple's bread-and-butter Mac business has shown signs of vigor lately. While growth in the broader PC industry remains sluggish, Apple last quarter sold 43% more Macs than it did in the year-earlier quarter, quadruple the pace of the industry as a whole.
Yet, in a sign of how small a player Apple remains in the PC market, the strong sales have translated into only minuscule market-share gains. Apple rose to 2.3% of new world-wide PC sales in the first three months of the year from 2% the prior quarter. Windows PCs account for the vast majority of the rest of the market.