Speculation on Real Reasons Behind Apple Switch

/ASCII writes "There is an article over at Ars Technica with some insider information about the reasons behind Apples x86 switch, given that the new IBM processors seem to be a perfect fit for Apple. The article claims that Apple hopes to power its entire line, from Servers to desktops to iPods and other gadgets with Intel CPUs, and that by doing so, they will gain the same kinds of discounts that Dell get."

Comments

Proprietary PC

[fbonnet]

With its switch to Intel, Apple is going to succeed where MS couldn't: build a "proprietary" PC that doesn't rely on anything legacy such as the BIOS.

Nearly everything except the BIOS will be standard on the Mactel platform. Seems to me like the perfect occasion to introduce a "trusted", DRM-enabled platform from the ground up.

Now Apple can tell the RIAA & MPAA: on our platforms, your stuff will be secure.

He's right about the Mac being "the past"

[alexhmit01]

The desktop wars are over. Commodity IBM PC-compatibles with Microsoft OSes and Intel chips won. Sure the market is HUGE and niche markets (even #1 player Dell doesn't dominate the market, it owns the niche for moderately supported business machines with semi-custom orders) remain extremely profitable if done right, but Intel and Microsoft have extracted most of the profits. Even highly innovative AMD can only capture 20% of the market.

In 1996 Fortune interviewed Steve Jobs and asked him what he would do if still running Apple. He responded that he would "milk the Mac for all it is worth and move on to the next big thing."

This doesn't mean that those of us with an investment in Apple hardware (or more risky, custom Cocoa software like we have) mean that Apple is going to abandon the Mac....

They are going the milk it for all it is worth.

With OS X, we have a NeXTSTEP/Mac fusion that Steve likes, and Apple will keep profitably pushing out software updates that they sell, but that isn't Apple's growth.

Their growth operations: software, when Steve rejoined they had recently gone from free OS upgrades to selling two upgrades, OS 7 and OS 7.5, IIRC, maybe 6 was sold as well.

Now, Apple sells new OS Versions every 1 - 2 years. They put out an iLife upgrade annually. They will probably put out iWork annually. And they replaced their free iTunes system with a nicely growing .Mac system, where the cost of the storage is going to zero but their annual subscribers are growth.

The average Mac customer pre-Jobs bought a Mac and used it for 6 years.
The average Mac customer post-Jobs buys a Mac, and uses it for 3-4 years with 2 OS upgrades, 1 or 2 software purchases, and 20% of a .Mac subscription (or some similar number). That means that Apple can sell a low-margin system like the Mini, pocket $100 on the system, and hope to grab another $200-$300 in software sales over the system's lifetime... So a $500 Mac Mini sale is as good for Apple as a $2000 PowerMac with 40% margins was 5 years ago.

Apple will keep innovating the Mac to milk the cash cow... They will NOT enter price-wars or otherwise fight with MS or Dell or HP for market-share. They will milk the cash cow, try to execute and expand markets, but they are NOT interested in growing to a 10% market with the SAME profits as now by cutting their margins by 75% which would make the software developers happy.

It isn't a zero-sum game, they are selling the iMac or Mac Mini as a digital life system. Sure you have a Windows machine for whatever... but add a Mac Mini and a KVM (and annual OS X + iLife upgrades) to easily put your kid's Soccer Games on DVD and send to his grandparents. That is their "growth" strategy.

It isn't a bad strategy, but selling easy-to-use digital toys is how Apple is a growth company, and Microsoft is becoming a mature company that will steadily increase its annual dividend.

Good for Steve Jobs, good for Apple shareholders, and hopefully good for its customers as long as Apple keeps putting out new products that we want to buy because we are the cash cow to be milked, but we aren't going to benefit from price cuts from a price war because market-share and PC growth just don't interest Apple...

That said, I'm sure at some level Apple sees Linux entering the network market for office networks, and realizes that with the best (and easiest to use) desktop Unix... he can enter that market. If you like Linux, if Apple gets the BEST WINELIB performance, the BEST Qt performance, and best Gtk performance, and has KDELIB and GNOMELIB ported... well how tough is it that Apple is able to compete with Linux for SOME share of the corporate desktop market.

Apple is in a position to make SOME gains in PC market-share, but growing back to 10-20% over 10 years isn't giant tech growth... the iPod and OTHER SIMILAR projects is.

It's a smart business move, and Apple has set themselves up to grow profits steadily in their core markets, and then swing for the fences with new products like the iPod, iTMS, etc.

Alex

Re:I don't understand the advantage...

[timster]

You misunderstand RISC. As do most people these days, it seems.

Back in the olden days, when chips were still designed by small teams on reasonable budgets, somebody noticed that hand-written assembly was rapidly becoming passe. When the assembly is being written by a compiler, it makes sense to design the chip with that in mind, and make an instruction set that is efficient at the kind of simple instructions that compilers like to write.

This led to a simpler design that could be made somewhat faster than a complex one. This led to many predicting the demise of so-called CISC chips. This prediction, like the "Internet in danger of collapse" and "Apple to go bankrupt" predictions, is no closer to actually happening than it was when it was first made.

The surprise was that Intel wanted a chip that had the speed advantages of RISC but used the same interface as their older chips, so they designed one. So they built a chip called the Pentium that translated CISC instructions into RISC ones. Since this operation is essentially O(n), they got good performance, and they've continued that basic design to the present day.

So to answer your question, it's already true that any operations that are not simple are emulated in software -- it's just that in x86 processors the emulation is on the CPU. Today there is no important difference between CISC and RISC, whether we are speaking of mainframes or desktops.

Bah

[Maury Markowitz]

Is it just me, or are the "insiders" who can't even spell just a tad less than credible?

Why can't anyone take the announcement at face value? Clearly IBM (and Moto/Freescale) don't want to develop new top-end chips for a small market. Who can blame them?

But Intel is going to build their next generation anyway. Apple's small marketshare is meaningless in this context, they're in a race with AMD for a huge market no matter what else happens.

Let's remember that Intel has been courting Apple for well over a decade now. They're also clearly unhappy with the crappy boxes being offered by their existing vendors. Having Apple onboard making cool products with their systems must be a dream come true -- "See, THIS is what an Intel machine can do".

But no, not enough of a conspiracy in that I suppose.

Re:Elements

[Waffle Iron]

Intel was working on 64 bit chips when AMD's main product was making pentium 1 clones.

Unfortunately for Intel, multi-year schedule slips and disappointing real-world performance results make that irrelevant. Starting earlier to develop something doesn't matter if the results of your efforts turn out to suck.

Re:Apple v. Dell?

[fitten]

Yup... Good points.

A friend of mine and I were talking and he came up with this:

If you could spend just a little more on a machine and get one that would run OSX and Windows vs. the cheaper one and just run Windows, which would you get? We talked and came up with stuff like this:

$0: no brainer, sure get the OSX-able one
$100: probably get the one that runs OSX
$200: probably not get the OSX one

As you say, the Mac faithful will buy whatever Steve puts out for them to buy. However, some of the Windows folks might just shell out a little more to get the option (even if never used) to be able to run OSX... if the price difference is reasonable enough. I think Apple will gain by switching to Intel parts, even if the performance is comparable, it just allows a wider market easier access to Macs and OSX.

I call bullshit.

[amper]

This article is so filled with misconceptions, revisionist history, wishful thinking, and downright FUD that it's difficult to extract the few relevant and correct facts from the story.

Apple not exactly rolling in cash

WTF? What pocket universe have you been living in? One of Apple watchers' biggest complaints about APPL is that they have been sitting on a tremendous amount of cash for years, when they could have spent some of it to shore up their market position in many, many different ways. I argue that one of the biggest mistakes Apple made was not buying Netscape before Sun and AOL divided and conquered it, or CS&T/Steltor before Oracle subsumed it. Think of where Apple might be today if we had an improved Netscape SuiteSpot running on Mac OS X. What if Apple spent some of those billions in cash developing a successot to the Apple Network Servers to run the above server software? Wouldn't you like to see a product that could absolutely destroy Microsoft Exchange using Internet Standard protocols?

And, speaking of Oracle, how many years did Larry Ellison sit on Apple's board without producing an Oracle server for an Apple platform? But, I digress..

Motorola in particular, has written off hundreds of millions of dollars in losses caused directly by the erratic actions of Apple Computer

Umm, how about..."Motorola in particular, has written off billions of dollars in losses caused directly by the erratic actions of Motorola? Hey, let's just completely ignore MOT's complete mishandling of the entire PowerPC agreement/concept. We weren't stuck at 500MHz because of Apple--it was MOT's inability to make a gracful transition to a new process line that caused *that*. Not to mention Motorola switching all internal operations machines to WinTel and ditching *their own product* in favor of a competitors?

IBM has other customers who actually pay up front for custom designs and who don't insist on having IBM tailor their product roadmap around a few million units a year

And how, exactly is the example of one of IBM's "regular" customers in any way relevant to Apple? You may have forgotten that Apple *owns*, at least partially, the PowerPC IP, not to mention the fact that *no other manufacturer* uses PowerPC in a general purpose computing application, other than Apple and IBM, themselves. Yes, IBM has "other customers", but none of these have the same needs or relationship with IBM that Apple has. IBM is doing as much damage to their own product line by not moving the Power and PowerPC lines forward as aggressively as possible, unless of course IBM intends to pawn off their workstation, mini, and mainframe lines to China, as well...

The bottom line is, no matter how much Hannibal would like to wish it otherwise, IBM screwed up royally, and in the process, screwed Apple and Steve Jobs. You may want to go back and read my Slashdot post from 2005-04-15 to see my evaluation of the possibility of Apple moving to Intel (which , I may add, was well before any speculation/rumors on the part of C|Net or the WSJ).

May I direct you to http://apple.slashdot.org/comments.pl?sid=146200&c id=12245408 ?

And I quote:

...Darwin seems to work just fine on x86 hardware. In fact, it arguably got its start on x86 hardware. The guys at Apple are no dummies--the upper layers of the OS may not be open source, but you can be sure that they are sufficiently abstracted from the lower layers that it would be a relatively simple job for Apple to port to another platform. They might lose things like AltiVec/Velocity Engine, but vector processors are widely available elsewhere.

For the same reason, I don't buy the argument that Apple will never release an x86 version of Mac OS X--after a

DRM

[rishistar]

I think IBM had the ability to produce chips that were what Apple wanted in terms of power (as the article points out - the newer batch of PowerPC chips are more like what they want).

What does Intel have that IBM didn't? Better support for DRM type stuff in the processor. From http://www.guardian.co.uk/online/comment/story/0,1 2449,1504558,00.html

Here's my theory. Steve Jobs has a long-term goal to position Apple as 'the' online media company. He already dominates the online music business with the iTunes/iPod combination. Now he wants to repeat the trick with online movies.

But Hollywood studios won't do a deal with him because they are worried about piracy. They want a platform with rock-solid 'digital rights management' (DRM) built in. And it just so happens that Intel has been moving technical mountains to build strong DRM into its processor architecture, whereas IBM doesn't see it as a priority.

Re:Apple v. Dell?

[falcon5768]

well the truth is schools is a misconseption. the install base for Dell in schools is MUCH lower than they claim, their turnaround rate though is much higher which is why they can claim they sell to more schools, BUT in truth there are almost the same number of computers as before, they just replaced their 1.5-2 year old Dells which crap out extreamly fast in a school enviroment, sometimes within a year (thank god for service plans)

Macs on the otherhand last a MUCH longer time. Up untill 2 years ago I still had fully used and working 5500s in some of our buildings in some labs. We still have at least 200-300 1st gen iMacs and infact barely ever buy macs, even though our install base is over 1500. They barely break and are easily repaired and do everything they need to do so why replace them. The only time we ever actually replace them is either cause the CRT goes out, or the motherboard dies. harddrive and optical drive problems are easily repaired by ordering parts even on iMacs.

If anything Apples biggest problem is they build things too well so the numbers dont match the actual install base. Wasnt there a /. article a month ago talking about that fact that Mac are actually 11-15% and not the horrable 2-5% some people give it.