Pigs Fly Over Cupertino

The thud heard 'round the world yesterday was the sound of millions of Mac users collectively fainting at the idea of -- gasp! -- Intel (Nasdaq: INTC  ) microprocessors powering Apple's (Nasdaq: AAPL  ) line of desktop and laptop computers. And did I mention that the Clintons just invited Ken Starr to a July 4th barbeque in the Hamptons? (OK, not really.)

But Apple and Intel? Yep. After more than a decade of employing the PowerPC architecture co-created by Motorola (NYSE: MOT  ) and IBM (NYSE: IBM  ) , Apple in 2006 will join the x86 crowd it has long lampooned in ads and CEO Steve Jobs' annual Macworld keynotes. That's why the loyalists are up in arms. Thinking the Earth has suddenly gone flat, they cry betrayal, wondering....

Has Jobs lost his mind?
No, he hasn't. In fact, this may be the most lucid decision he's ever made as Apple CEO. Remember: IBM let down Apple big time last summer with chip delays. That pushed back the shipping schedule for the new iMac during the critical back-to-school season. The mercurial Jobs couldn't have been happy about the delay, or that Intel-powered machines were routinely reaching 4-gigahertz clock speeds while the fastest Macs were less than half that. Clock speed is hardly a flawless measure of total system performance, but there's little doubt that in some respects, the top PCs had more processing horsepower than the top Macs.

It's all about performance
Longtime computer columnist John Dvorak yesterday addressed both of these issues, reporting that sources told him Apple has been talking with Intel since 2003. Now that a deal is in place, Dvorak writes that a new Mactel machine with Mac OS X's underlying UNIX system could scream past Microsoft's (Nasdaq: MSFT  ) Windows PCs in tests. We won't know for sure until comparable models are released. But Jobs is famous for demonstrating how well the Mac renders graphics or edits photos compared with Wintel machines, and the Mac has always held up well. Isn't it arguable that slower processors handicapped the Mac in those tests? If so, then Dvorak's conclusion is at least reasonable and offers insight into why Jobs would do this deal.

Think about it: He gets a screaming fast chip that exudes less heat, which he can put in a Mac designed to blow the doors off a comparably-equipped Windows machine in real-world tests -- all with a fraction of the virus and spyware problems. What would you do if you were Jobs?

But the software...
The big fear, of course, relates to software. What happens to all the software created for the old PowerPC architecture? An old friend of mine who was a long-time reporter for a popular magazine covering the information technology industry writes here that applications written to the core Mac OS interface should have little trouble transitioning. During his announcement, Jobs also demonstrated Rosetta, new software that he said would allow Intel-based Macs to run software written for their predecessors with relative ease and speed. Even if software proves to be a problem, Apple will likely get the same kind of marketing subsidies from Intel that Dell (Nasdaq: DELL  ) has long claimed. The extra moolah can help developers make the switch.

Only the paranoid speculate
Finally, what about Intel? What does it stand to gain? I won't say billions, because that's simply not true. For all Apple's recent success, it still owns only 3% of the global PC market. Still, count this as a major symbolic victory for Intel, which has long wanted to gain a reputation for style and innovation. Witness the amount of hyperbole it has spent over the years on powering digital homes, for example. Linking up with Apple could be Intel's first step toward a wider, consumer electronics-oriented audience.

And think about this: Jobs was probably none too pleased to see IBM go work with Sony on the Cell multi-core chip for gaming and other mobile applications. It stands to reason that Cell siphoned Big Blue's mindshare and energies from Apple to Sony. Wouldn't it be interesting to see Intel, which also wants a bigger slice of the mobile market, team with Apple to revive the Newton personal digital assistant? Or maybe the long-awaited iPod phone? Or ... you get the picture.

The Foolish bottom line
All conjecturing aside, Apple's prospects in the PC market today look a lot brighter than they did Friday. And that's entirely because of the possibilities springing from a relationship between Intel and the Mac maker. Faster machines top the list, but a few extra million in marketing and development funds to help build a wider user base is nothing to sneeze at either. In sum: Pigs may be flying now, but in Apple's bank account, profits could be landing soon.

Fool contributorTim Beyers wrote this story on a G3 iBook, but he's salivating at the prospect of getting a 5 GHz Mactel PowerBook next Christmas. Whaddya say, Steve? Tim didn't own shares in any of the companies mentioned in this story at the time of publication. You can find out what's in his portfolio by checking Tim's Fool profile, which ishere.


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  • Report this Comment On September 28, 2007, at 3:20 AM, zoom9898 wrote:

    It doesn't surprise me considering Apple is a desperate company that targets 1% of users that are lured into "thinking different". Apple was once great, but soon after the 80's they became a desperate company doing anything to fool people into buying their stuff. Lying in advertisements about their computers being fastest and thumbing their nose at Intel etc. Some TV ads even had to be pulled because they boasted the fastest computers but they weren't. Or the dumb ads showing iMacs with nothing plugged in to give the illusion of simplicity.

    No wonder Apple enthusiasts are upset. Jobs misled them by claiming it would be fastest. Now they want Intel. lies eventually catch up with you... Oh I won't even get into the itunes cr*p. anyone who understands mp3's knows what I mean.

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