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Apple to shift from IBM to Intel chips
SAN FRANCISCO (Reuters) - Apple Computer Inc. (AAPL.O: Quote, Profile, Research) on Monday said it will shift to using Intel Corp. (INTC.O: Quote, Profile, Research) microprocessors in its Macintosh computers, severing its long relationship with International Business Machines Corp. (IBM.N: Quote, Profile, Research) , which had supplied chips to Apple.
Apple said it will begin delivering Macintosh products using Intel microprocessors by this time next year and will have all of its all flagship Macintosh computers using Intel processors by the end of 2007.
Apple has publicly expressed frustration with IBM as a supplier in recent quarters. IBM had problems producing enough working versions of its PowerPC 970 chip, which Apple calls the G5. Also, IBM has yet to produce a version of the G5 that consumes less power and would be suitable for use in Apple's laptop personal computers.
"This is not going to be a transition that happens overnight. It's going to happen over a few years," Apple co-founder and CEO Steve Jobs said.
The move by Apple, which has been the subject of speculation for more than a decade, is a high-profile win for Intel, the world's largest chipmaker, and a blow to IBM, whose PowerPC chips are used in Apple's desktop PCs, and Freescale Semiconductor Inc.(FSL.N: Quote, Profile, Research) , which provides chips used in Apple's laptop PCs and the Mac Mini.
Apple has a near 2 percent share of the global personal computer market, but after years of decline it is now gaining on its rivals as its iPod music players re-establish the firm as a trendsetter in design and software.
Apple also said it expects Microsoft Corp.(MSFT.O: Quote, Profile, Research) and Adobe Systems Inc. (ADBE.O: Quote, Profile, Research) to create future versions of Microsoft Office and Creative Suite, respectively, for the Macintosh that support both Power PC and Intel processors. Adobe is the maker of document-sharing software that is the near-standard on PCs.
The switch to Intel chips will be expensive, complicated and could cost Apple some of its share of the global PC market, analysts have said.
"It could cost hundreds of millions (of dollars) of re-engineering. It's not easy work. It's deep work at the base of the (software) kernel," said analyst Brian Gammage at research group Gartner.
Apple share were down 2 cents at $38.22 on Nasdaq. IBM shares were down 44 at $75.35 on the New York Stock Exchange. Intel shares were down 17 cents at $27.16 on Nasdaq. (With additional reporting by Spencer Swartz and Lisa Baertlein in San Francisco, Lucas van Grinsven in Amsterdam, and Joseph Giannone in New York)
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