Apple's Real Target: Dell

I'm going to break a promise today. Back in March, I said I'd stop speculating about Apple's (Nasdaq: AAPL  ) prospects. Well, now that a deal with Intel (Nasdaq: INTC  ) has been consummated, all bets are off.

Part of the reason I've lifted the cone of silence is because I think much of the current speculation is wrong. Legions wonder whether the deal will reignite real competition with Microsoft's (Nasdaq: MSFT  ) Windows operating system. But Apple isn't a software company; it is, and always has been, a device company. What defines Apple? The iPod, iMac, and PowerBook. AppleWorks, Final Cut Pro, and iPhoto are cool add-ons that help sell the hardware. And that's all.

Apple's real enemy is Dell (Nasdaq: DELL  ) , plain and simple. The Intel deal aims to lure those buying computers from Dell -- or Gateway, or Acer, or even iPod partner Hewlett-Packard (NYSE: HPQ  ) -- into trying a Mac. Everything else is a distraction.

I'm going to take aim here at three of the more popular myths: the Mac OS on Intel will spawn a legion of clones, Macs will get cheaper, and Apple might also team with Intel rival Advanced Micro Devices (NYSE: AMD  ) . Here's my take:

1. Don't expect Mac clones, ever. I consulted for one of the Mac cloners back in the 1990s. It was a doomed effort then and would be again, and you can bet Apple CEO Steve Jobs knows it. He spiked the previous Mac clone deals shortly after returning to Apple in 1996. Jobs wants to sell millions of screaming-fast $2,000-$3,000 laptops and hundreds of millions of iPods. Licensing the Mac OS doesn't fit with that agenda.

2. Don't expect dramatically cheaper Macs. Apple has spent years creating a premium experience. Witness your local Apple store and how different -- and clean -- it looks compared with CompUSA, Best Buy, or any other place you buy a computer. Sure, some of those Intel chips' efficiencies will be reflected in marginally lower prices, but Apple has run on excruciatingly thin margins for years. The company's recent good fortunes have changed that. It's a good bet that Jobs will do whatever he can to keep margins closer to what Dell enjoys.

3. Expect a deal with AMD. Not soon, of course. But Apple's announcement of the deal with Intel pointedly said nothing about exclusivity. Probes into Intel's business conduct in Japan and the European Union undoubtedly took any kind of exclusive deal off the table. And that leaves the door open for AMD. There's no reason for Apple to explore such a relationship now; there's too much money available from Intel and not enough from AMD. But it's worth noting that AMD appears to be at least 18 months ahead of Intel in one key area: dual-core chips for servers. Were Apple to upgrade the Xserve line, AMD would be a good source for processors. It's a short path from there to AMD-powered PowerBooks.

Think I'm wrong? Go ahead and tell me. I'll publish the best counter-predictions a week from today.

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Fool contributorTim Beyerssometimes has an apple a day. He's seen no proof it actually keeps the doctor away. Tim didn't own shares in any of the companies mentioned in this story at the time of publication. You can find out what stocks he owns by checking Tim's Fool profile, which ishere.


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