Apple wants a Pentium M, IBM wants an Xbox

A processor alliance between Intel Corp. and Apple would have seemed unthinkable five years ago, when Apple Chief Executive Officer Steve Jobs first began setting up the company’s “just in case” plan for moving to Intel’s chips if its relationship with IBM Corp. and Freescale Semiconductor Inc. faltered. With IBM and Freescale moving in different directions from Apple, the backup plan moved front and center.

Jobs ended days of speculation during a speech at the company’s Worldwide Developers Conference (WWDC) in San Francisco on Monday, confirming that Apple will use Intel processors in its Macintosh computers starting in 2006. This will require software developers to port their applications away from IBM and Freescale’s PowerPC architecture to Intel’s x86 architecture, a significant undertaking for some developers.

The first Apple systems in 2006 will use Intel’s Pentium M processor, according to sources familiar with the companies’ plans. The Pentium M uses the same x86 architecture as the Pentium 4, but consumes far less power than Pentium 4 chips and its design philosophy is expected to be the model for Intel’s future processors. Apple spokespeople did not return repeated calls seeking comment, and an Intel spokesman declined to comment on Apple’s product decisions.

Jobs justified the move away from the PowerPC architecture to Intel’s x86 architecture based largely on Intel’s ability to deliver a high-performance per watt ratio compared to IBM’s future chips. This would tend to favor the Pentium M, which is just as powerful as high-end Pentium 4 processors yet uses far less power, Intel executives said earlier this year.

Industry analysts agreed that the Pentium M product Intel plans to launch in early 2006, the dual-core Yonah processor, could be an industry leader in performance per watt at that point.

IBM’s PowerPC 970FX chip, which Apple called the G5, simply doesn’t lend itself to PC designs that require low power consumption, such as notebooks and small form factor desktops, Jobs said. Apple was also frustrated by IBM’s inability to supply it with sufficient processors last year as the chip maker struggled with yield problems while getting its new manufacturing facility in East Fishkill, New York, up and running.

But Apple accounted for just around 2 percent of IBM’s chip wafer production in East Fishkill, according to industry sources, and IBM is moving away from making chips for the PC market in favor of gaming consoles and high-end servers. An IBM spokesman declined to comment on the nature of his company’s relationship with Apple, but the company put out a statement indicating it probably won’t miss Apple’s business.

“IBM is aggressively moving the Power Architecture beyond the PC, as shown by our recent successes with the next-generation gaming systems announced by Sony, Microsoft and Nintendo. … IBM is focused on the highest value opportunities in each marketplace, and our direction with the Power Architecture is consistent with that strategy,” the company said in a written statement.

Console makers like Sony Computer Entertainment Inc., Microsoft Corp., and Nintendo Co. Ltd. will sell tens of millions of units combined over the next couple of years, and it’s likely that IBM would rather focus its attention on the deals it has struck with all three companies, as opposed to taking on the engineering challenge of making a low-power G5 processor to suit Apple’s small market share.

Freescale, Apple’s other PowerPC chip supplier, introduced a dual-core PowerPC chip last year that used two G4 cores. The G4 processor currently ships with Apple’s Mac mini, Powerbook, iBook, and eMac products. This chip might have been able to compete with Intel’s Yonah, and would have staved off the painful software transitions for at least another year, said Nathan Brookwood, principal analyst with Insight 64 in Saratoga, Calif.

But Freescale is primarily concerned with the embedded and mobile phone markets, and is not prepared to make the same investments in future PC chip design as Intel is guaranteed to do, said Dean McCarron, principal analyst with Mercury Research Inc. in Cave Creek, Ariz. Therefore, Apple had little choice but to make the historic move to standard PC chips, he said.

One chip company on the outside looking in is Advanced Micro Devices Inc. (AMD) Several industry analysts felt that if Apple was ever going to move to x86 chips, it might have found AMD a more suitable partner given the underdog status of both companies and the competitiveness of AMD’s Opteron and Athlon 64 processors. Apple and AMD have indeed talked about a relationship at certain points in their histories, and have worked together as members of the Hypertransport Consortium, said Drew Prairie, an AMD spokesman.

However, Prairie was not able to comment on any recent talks between AMD and Apple.

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