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Apple to switch to Intel chips starting in '06-CNET

SAN FRANCISCO (Reuters) - Apple Computer Inc. (AAPL.O: Quote, Profile, Research) plans to announce on Monday that it will switch to using Intel Corp's microprocessors and phase out its current chip supplier, International Business Machines Corp. (IBM.N: Quote, Profile, Research) , CNET News.com reported late on Friday.

The technology news Web site said that Apple plans to move lower-end computers like the Mac Mini to Intel chips in mid-2006 and higher-end models such as the Power Mac in the middle of 2007, Cnet said, citing anonymous sources.

Apple's Chief Executive Steve Jobs is scheduled to deliver a keynote speech on the first day of its annual conference for software developers on Friday, a venue the report said would be appropriate for an announcement that would require significant changes to the way Apple software is written.

Spokesmen from Apple, IBM, Intel and Freescale Semiconductor Inc. (FSL.N: Quote, Profile, Research) all declined to comment on the report. Apple also uses Freescale chips.

Analysts said that Apple might have considered switching to Intel because IBM hadn't been turning out a broad enough line of chips. IBM has reached deals to supply chips to next-generation video game consoles for Microsoft Corp. (MSFT.O: Quote, Profile, Research) , Nintendo (7974.OS: Quote, Profile, Research) and Sony Corp. (6758.T: Quote, Profile, Research)

If true, the move by Apple to Intel's Pentium chips from IBM's PowerPC chips would cap more than a decade of speculation. Both Intel and Apple have had talks over the years, though Apple has always opted to stay with IBM, analysts said.

The move would be highly complicated, expensive and could cost Apple some of its less than 2 percent share of the global PC market, said Kevin Krewell, editor in chief of the Microprocessor Report, a chip industry publication.

"It's going to be a horrendous challenge for the software developers who just completed the transition to OS X from OS 9," Krewell said, referring to the latest version of Apple's operating system software.

Not only would it be expensive for the software developers who create programs that run on the Mac, it could stall sales of the Mac PCs.

"If word gets out that Apple is changing platforms, why would they buy a PowerPC?" Krewell said, adding that he expects a negative reaction from developers at Apple's conference. "They'd wait for two to three years to get an Intel platform."

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Additionally, for years, Jobs has touted Macs powered by PowerPC chips as faster at certain computing tasks than Intel's Pentium microprocessors.

"I don't know how Steve and Apple are going to spin this," Krewell said. "Year after year, Apple has promoted the PowerPC over Pentium."

There is precedent for Apple's move, however. In the mid-1990s Apple moved from Motorola's 680x0 line of chips to IBM's PowerPC chips, but Insight 64 analyst Nathan Brookwood said Apple lost market share when it did so.

Brookwood also said such a move could frustrate some loyal customers of Apple.

"Every time they go and they change their architecture, a bunch of people who had been with them go, 'This is too much trouble. The PC world has been pretty consistent, and Apple keeps changing."'

He said that speculation about an Apple switch had flared up again on Friday.

On May 23, the Wall Street Journal reported that Apple had been in talks that could lead the company to use Intel chips in its Macintosh computers, sparking a 5 percent rally in Apple's stock price.

The report cited two industry executives with knowledge of recent discussions between the companies.

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