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Apple
AAPL, IBM & MOT

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By Cropsey
October 23, 2001

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From www.macosrumors.com:

On two occasions this month, Steve Jobs has met with Lou Gerstner of IBM to discuss PowerPC plans. IBM is in early negotiations with Motorola to buy all Alti-Vec related assets to use in its future Power PC processors, and Apple is looking into buying Motorola's Power PC semiconductor assets. IBM said that if Motorola cannot start getting reasonable G5 yields, it would begin to produce test yields in early Decembe for Apple in order to keep Apple on course with its hardware plans, but Apple must pay a penalty to Motorola if it is to seek IBM as its sole G5 supplier for more than 90 days. Apple has also put out tenders for manufacturing of its low-power and 0.10 micron G5's. So far, Taiwan Semiconductor, IBM, and AMD have responded.

Apple has until July 1, 2002 to decide whether it will purchase MOT's power PC assets. There has been much heated discussion about this recently here. Apple is taking no chances, and it has a contingency plan if all else fails: A Power PC Exit Strategy. The main problem here is the slowness of developers to port their Apps to Mac OS X. The main problem here is that Mac OS X apps would only need a simple recompile, but Classic Apps would literally be "locked out". Apple has fingered Intel's Mckinley and Sun's Ultra Sparc III series and beyond as possible candidates.

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Aside from the vast difference in corporate cultures, I see a joint venture between Apple and IBM as having huge potential. Should the two companies "join forces" in a way that wouldn't compromise their ideals, the end result could be a sharing of technology and a marketing synergy which could win back a large percentage of business for both firms.

Both companies understand the inner workings of PPC processors, how to develop them, produce them and present data processing solutions to end users. IBM is developing Linux solutions for its servers, thus moving forward with a minimal user interface, the perfect opportunity for OSX. In the laptop/desktop venue the IBM badge is virtually useless against a price slashing Dell.

Apple's innovative nature is a sword that cuts both ways. The brand suffers from such misperception in the business community that the company has all but surrendered that market to Wintel. Even with a vastly better product its products are shunned because the innovative nature of its products and changes in management have taken it on an economic roller coaster ride. What Apple has in excitement it lacks in respectability.

I find it interesting that these two companies are the true originators of desktop computing and Microsoft was able to seize the golden egg laying goose for itself. Rightly so, an Apple/IBM Joint venture is [the] only force that could stand up to .net, and possibly win the enormous jackpot.

In the enterprise market, IBM could sell UNIX technology veneered the best user interface on the planet linked to desktops systems having those same advantages and powered by highly tuned PPC chips that could offer either unmatched power or unmatched economy, bringing incomparable benefits to large businesses. Combine that with IBM's reputation for reliability and appeal within the IT community and the end result could be the offer of an easier to use system with less down time and minimal risk.

For the consumer/small business market, Apple would benefit from having some of the best microprocessor development and production on the planet at its disposal, allowing it to move smartly ahead of the Wintel cabal. The respectability it would get from its close affiliation with IBM would certainly help it's image, there would be no more talk of a Mac being a toy, or Apple going out of business. They're in bed with IBM! Instant Respectability. Apple no longer a niche, but a FORCE to be dealt with.

Best of all the entire business gets more vertical. From development through manufacturing to sales, there are fewer and fewer fingers in the pie.

Take it one step further and buy key developers like Connectix (for VirtualPC) and make some products more accessible (like ViaVoice) and you've got one tough act to follow.

Would Gates kill Office for Mac? Maybe not. After all, MSFT gets about $100 per PC for Windows and three times that every time a Mac user wants to use Word. MSFT wins either way.

Hmmmm.

cropsey

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