Apple Dumps PortalPlayer Chip

Quash writes to mention a BusinessWeek article about Apple's decision to not use the PortalPlayer chip in a future version of the iPod nano. From the article: "PortalPlayer stock promptly shed $9.46, or nearly 42% of its value, and more than $220 million in market value. Apple generally doesn't discuss future products, nor its manufacturing or component supply strategies. It had no comment on the matter. But theories about who may have been the beneficiary of PortalPlayer's misfortune are abounding."

Comments

Why were they dumped?

[Whiney Mac Fanboy]

Interesting that this announcement from Apple came the quarter after PortalPlayer announced a new technology (called Preface) that's designed to work with Windows Vista only.

So - were they dumped for practical reasons or for punitive reasons? What do people think?

Onto a different aspect of this story - the company being touted as the most likely supplier of replacement chips is Samsung (allready a supplier of a good deal of ipod flash memory). Is it really wise for Apple to trust a competitor with components crucial to Apple's core business? (ipods are Apple's core business now).

Well, I guess Apple are happy doing business like this

Re:Why were they dumped?

[gEvil (beta)]

Maybe their CEO did not greet Steve in the coffee shop earlier that morning...

"I'm going to fucking kill PortalPlayer!"

Whoops. Wrong Steve...

Re:Why were they dumped?

[dsginter]

I think that we are close to seeing why Apple *really* switched to Intel. Put on your tin foil hat because I'm about to take you for a conspiracy theory ride:

1) Intel have been working with Ovonyx since 2000 on a technology called phase change memory (or PRAM, for short). Basically, PRAM uses chalcogenide - the same material used in rewriteable optical media - in a solid state RAM, only it is manipulated electrically, instead of optically. This gives the RAM nonvolatility and random accessibility. It is several orders of magnatude faster than flash (nearly as fast as DRAM) and has a write cycle endurance of 10^12 demonstrated as of about 4 years ago.

2) Intel patent applications have led me to believe that they have made great strides in the technology, while remaining very tight lipped. Here's some insight. Note that they are discussing the displacement of SRAM, DRAM and flash with this technology. Noteworthy, is the following:

[0058] Turning to FIG. 5, a portion of a system 500 in accordance with an embodiment of the present invention is described. System 500 may be used in wireless devices such as, for example, a cellular telephone, personal digital assistant (PDA), a laptop or portable computer with wireless capability, a web tablet, a wireless telephone, a pager, an instant messaging device, a digital music player, a digital camera, or other devices that may be adapted to transmit and/or receive information wirelessly. System 500 may be used in any of the following systems: a wireless local area network (WLAN) system, a wireless personal area network (WPAN) system, or a cellular network, although the scope of the present invention is not limited in this respect.

Now, here's where it all begins:

Envision, if you will, a high-speed, nonvolatile memory with very low power consumption. This enables the following:

1) Intel Robson Technology. This would answer the question of durability. Why would Intel demo such a technology if flash memory would wear out in short order? With PRAM, you've got CMOS compatibility so you can throw the whole deal right into the processor.

2) Ultra-low power wireless devices. Add Intel's Wireless USB and you've got the perfect medium to talk to your iPod. In addition, your gonna end up using it for more than just an iPod. Store your entire "desktop" on the damn thing, add some authentication mechanisms and you can use any wireless USB equipped PC to log into your "wireless personal server".

There's more, but this should be good for now.

Re:Why were they dumped?

[xoboots]

Looking at the last earnings report from Apple it seems that the REAL reason they switched to Intel was to lower overall component costs. Scale matters -- being the only retail game for PPC was putting a premium on Apple's marginal costs; since switching to the Intel ecosystem they reap the reward of using essentially commoditized parts.

So it wasn't really about a supposed technology ramp-up which they touted and I doubt they were banking on "future" technologies. The way I see it, it was simply a matter of the bottom-line: you really can lower costs when using high-availability parts. Go figure.

Never-the-less, that's some fun technology to be watching.

Seems obvious

[joebooty]

The Nano got destroyed by suppliers not being able to provide product when the Nano oversold estimates. You will all remember how we were flooded with nano commercials at launch and then the commercials disappeared and so did the Nanos because Apple could not assemble any units to sell.

With this move Apple shifts from having a critical part supplied by a bit player to the part being supplied by one of the behemoths of the industry in Samsung.

Furthermore the Korean semiconductor companies are infatuated with marketshare. I am certain Samsung offered them a tempting deal as long as they were the singlesource.

I just spoke to Dvorak, he knows.

[Tibor the Hun]

According to him it's Chevrolet!

You heard it here first folks!

Re:Massive Drop In iPod Demand

[monoqlith]

Ok, now you're simply making things up. From this article regarding Apple's most recent quarterly earnings reports:

"Apple said it shipped 1,112,000 Mac computers and more than 8.5 million iPods music players during the quarter. The iPod shipments represented a 61 percent increase over the same period last year."

Therefore what you have just said is patently incorrect. QED.

Re:Massive Drop In iPod Demand

[Jerry Rivers]

"...as the massive drop in iPod sales shows."

For more information on this "massive drop in iPod sales" please read: http://www.ipodobserver.com/story/26405

Highlights from the above story:

  iPod shipments are up 61 percent compared to last year, and the company has now sold over 50 million units.

  The iPod market share is up, too, accounting for 78 percent of the portable music players sold. In December 2005, that number was at 71 percent

  Outside of the United States, the iPod is the top-selling MP3 player in the United Kingdom, Japan, Australia, and Canada.

Despite strong iPod sales, Apple sees room for major growth in the MP3 player market. Based on sales of other consumer electronic devices, Mr. Oppenheimer noted, "The MP3 player market has a lot of room for growth. According to Forester research, U.S. household MP3 player penetration was less than one quarter that of digital cameras as of the end of 2005."

PP is expensive!

[Fengpost]

Portal Player solution is very expensive. Last time I checked, it requires 2 ARM 7 chips with an external auio codec chip to run the the non video version iPod. There are plenty of more cost effective solution from the competitors such as Sigmatel, Philips or Freescale.

It is probably just a cost cutting move for Apple.

Other Theories

[caramuru]

As an unhappy PortalPlayer stockholder, I have been reading everything I could find on the company since the news hit the street yesterday morning. The stock price has been driven down to less than two times the cash (on a per share basis) the company has in the bank - a very pessimistic valuation. Something not mentioned in the article is pricing. Some believe that either PortalPlayer has been too greedy or the new supplier (not known now) very agressively priced its chip. The new supplier might be Samsung, who already supplies flash memory for the iPod. Samsung could give Apple a "twofer" price on memory and processor. Another potential supplier might be Sigmatel. Until someone at Apple leaks the name of the supplier we will not know who the new supplier is. Apple employees, get busy! Doing business with Apple is not always a happy experience - ask IBM.

The reason they dumped PortalPlayer

[pslam]

...is because their chips were a buggy pile of putrid crap. Seriously I'm surprised they lasted this long. It's an underpowered chip by today's standards (ARM7TDMI? are they joking?), it's not the lowest power consumption available by a long shot, and they don't integrate enough peripherals to lower total product cost. They're years behind the competition now, and they have nobody to blame but themselves.

So, congrats to Apple for finally ditching them. You should all look forward to some better performing and longer lasting iPods in the future. Yes, I'm rather bitter from having to deal with the muppets at PortalPlayer in the past.

Re:Massive Drop In iPod Demand

[Anonymous Coward]

Holy shit! The crazy Apple fans are in full Protect The Hive mode!

Onward Mac Soldiers! Let the unbelievers perish in a hail of moderation!