Intel chips help Apple play to its strengths
Troy Wolverton of the San Jose Mercury News, a sharp reporter who was formerly with TheStreet.com, has an interesting piece today about Apple Computer's challenge to remain an iconoclast even as it embraces Intel processors and grows market share. Though the piece is thoughtful and smart, I take issue with the central premise: that because Apple (AAPL) has adopted Intel (INTC) chips, CEO Steve Jobs will be forced to play the commodity PC game along with Dell (DELL), Hewlett-Packard (HPQ) and the rest of the bunch.
I don't think that's going to happen at all.
First, to be fair to Troy, he doesn't pull this assertion out of his butt — he quotes respected industry analysts as he sketches the landscape. But I think he gets the main thrust of the piece exactly backward. Apple won't have a harder time differentiating itself from other PC makers now that it has Intel chips. It will have an easier time.
Here's why:
In the past, Apple suffered because its PowerPC chips had a numerical disadvantage against Intel-based machines. Intel's megahertz and gigahertz numbers just looked better. Even though Apple tried and tried to combat Intel with marketing, it didn't have much success.
By switching to Intel, Apple has taken the chip issue off the table. When people are comparing a Mac to a Windows PC, the main things they'll look at now are design and operating system. Design is clearly one of Apple's strengths, and its current crop of "Mac/PC" commercials seek to cast Mac OS X as a cooler, more creative, more virus-free platform.
Wolverton also suggests that with Apple on Intel, some of its secrecy will be compromised. People will know that when Intel has a new chip, Apple will build it into its machines. The story says:
In the past, Apple could pretty much determine on its own when to plug a chip into its computers. It didn't have to worry about competitors.
But because Intel makes a big show when it puts out a new processor, it will be pretty clear whether Apple has the latest chips. That could be a key factor in luring Windows customers, who have long shopped for computers based on their underlying processors.
If only it were true that Apple could determine on its own when to plug a chip into its computers. Actually, Apple was at the mercy of suppliers who refreshed their chips far less reliably than Intel does, and the uncertainty played havoc with Apple's customer base — particularly with professional customers. So now, the Intel upgrade game will actually play to Apple's advantage.
My main contention here is that Apple's quirky pre-Intel chip upgrades were not helping the company sell Macs. They were hurting. And in an ideal world, chip upgrade cycles have never been the main factors driving Mac purchases.
People have rarely lined up at the Macworld Expo to see what chips Steve Jobs was putting into the latest Macs. Most often, they line up to see new designs, new software experiences, and new peripherals. In fact, when all Jobs does is unveil faster processors, it's a major bummer.
The switch to Intel is allowing Apple to focus attention on the things it always wanted to be its differentiators: design and software. Those are the things that have allowed the Mac maker to charge a premium for its products, and post margins that are the envy of the PC industry.
Jesse, that is nonsense. The G5 posed more problems related to heat than the current line of Intel chips. There was no way a G5 could be put in a laptop case, you can with the Core Duo and Core 2 Duo.
The Xserve G5 needed lots of fans, not so with the quad Xeon Xserve: they got so much more space inside because of less heat problem that the new Xserve have one more hd drive bay and a dual power unit.
You are just joining the long list of delusional Cassandras warning people that Apple will close in two years since what … ? 20 years as of today?
Jesse:
One thing to note is that while software needs to take advantage of multithreading to see performance gains on multi core systems, most applications will see a gain. For example, if you have 100 equal processes running on a single core system it will take twice as long as on a dual core system and 4 times as long as on a quad core system, just because they can run more processes concurrently. Though I agree, Apple has had a lot of experience with multi processor set ups and so can apply that to multi core.
tim:
The macbook shutdown problem was a heat problem, but it was to do with the detection of the heat, not the actual heat. A fan wasn't spinning up when it was meant to so the Macbook shut down to prevent damage.
Steve Jobs wasn't in charge of Apple until 1998, he wasn't at Apple from 1985 to 1997. 1997 was when it was on the brink of being sold off yet he came back, managed to get the iMac out and restore Apple to where it is today. He and his team saved Apple, not limited it
As for the iPod, for the past 5 years everyone has been saying "This year we're going to see someone wipe the iPod off the map" and every year these so called iPod killers haven't done anything. This year we have MS with the Zune. They might have a chance, but it's not like they haven't faced deep pocketed competition before from the likes of Sony and Dell. The iPod is here to stay, whether it will remain as dominant as it has been is another matter, but when iPod is synonymous with MP3 player it's going to be hard
Jessie:
I'll take some of that farm bet, too!
But if you chose the farm using similar logic to how you evaluate computers and computer businesses — perhaps I'll pass!
Jesse,
The PPC G5 chips Apple used before switching to Intel were a far greater challenge to cool than the current line of Core chips. Apple has explored and implemented some of the most sophisticated cooling solutions in the industry. And even before that, Apple would push cooling solutions to the limit by offering computers that Jobs insisted make no noise and therefore had to be engineered to cool with no fans. Jobs and Apple have expertise in the cooling of processors that the likes of Dell and others would have a hard time matching.
No, the current crop of troubles (shutdowns-discolored plastics-cracks, etc.) has more to do with Apple pushing the limits of the various technologies in the Macbook. This is Apple's notorious rev. A syndrome, and sadly it is the price many early adoptors pay to ride the edge of innovative design. But not to worry. In the long run, Apple always takes care of its rev. A customers and polishes out the unanticipated blems in subsequent revisions.
As much as you would perhaps like to see Apple's recent successes derailled, it's just not going to happen. Apple is like a sleek and silvery super train barreling through the world's computer and technology landscape. Microsoft on the other hand is like a worn out Union Pacific freight train that has been broken down on a side track for the past six years. Windows users can continue to wait at the station for their train to come, or they switch platforms and buy a ticket for the Apple Express. Those who do will marvel at the smooth ride, great service and free drinks. In either case Windows users would, at the very least, be wise not to play on the tracks.
Jessie,
You're making a bad bet. I'm not talking about just the farm. You're betting that the Macbook firmware update slows down the processor. That's not likely. It's much more likely that the fans start running at lower temperatures and keep running longer, possibly even faster. Don't believe everything Rob Enderle says, especially when he admits that he's just speculating: "What they appear to be doing is…" is not to be quoted as a statement of fact.
As for your farm bet, I'd like some of that action too!
Jessie:
If you really knew anything about Apple you would realize that Steve Jobs was not at Apple in the early 90's and it was ONLY after he came back that things there started to pick up. Have you ever heard of Scully? Spindler? or Amelio?
You sound like the typical Apple is going to fail again naysayer… nonsense. I too would like to know where that farm is .. Tim lets start a biddinig war!
Jan.
The problem for Mac in switching to Intel chips is that Intel chips are a lot faster and this generates more heat and requires a re-design of the heat sink. The fact that Macbooks have been shutting down on customers indicates that the problem is probablly a heat issue. By issuing a fix that slows the processor down, apple falls further behind other PCs that have a long history of dealing the the issue of heat and heat sinks. Steve Jobs very restrivtive approach which lead to them almost going out of business in the late 90's is still evident and, unless steve jobs changes his own ideas, then I would bet the farm that within 2-3 years Apple is going to be in serious trouble. Within a year or two their Ipod is going to be under heavy attack with as good of players as Ipod but cheaper and this will cut into Aplle's Ipod profits.
Here's another point – Intel is going multi-core – these chips don't simply double or quadruple speed, software must take advantage of the threading.
Apple has known this and worked on it for the last ten years, since purchase of NeXT. I assert that the overall performance of an Apple machine will be better than VISTA when 10.5 ships at around the same time – January / first quarter 2007.
10.5 has worked very hard to handle multi-core/multi CPU hardware and the way the system software is designed will take great advantage of this. You'll see that installing 10.5 after January will cause an overall performance boost to the hardware that is shipping today, like the new Core-2 Duo computers released recently. Apple machine will end up being nicer, cheaper and faster all at the same time.
We'll see in January how VISTA and 10.5 perform, but I'd expect multi 'core' operations to be much faster with Apple's OS than with MS's OS.
Can't wait for January!
How can a company with over $10 billion in cash be predicted to go out of business in 2 to 3 years? That's a lot of foolish talk. Many people look at Apple as just a hardware company; but look at the great software that is available from Apple. Although Apple doesn't reveal their road map like other cos, they consistently adapt new technology to their product lines and garner the WOW! factor that gets the press buzz.