Deep Inside The Computer Business: The Tactics And The Politics
Apple Computer has been in talks with
semiconductor-maker Intel (discussed in
this column on February
11) to use its chips in Apple’s Macintosh computers,
according to The Wall Street Journal. Currently, Apple uses
IBMs PowerPC chips. There has been speculation over the years that Apple might
shift to Intel chips. But such forms of speculation in the tech business are a
spectator sport. It is unclear whether Apple is serious about using Intel chips,
whether the talks are exploratory, or whether Apple would use both IBM and Intel
parts versus a making complete shift to Intel.
My take on
the recent Journal article is that Apple may be in a snit over the
apparent priority within IBM of the Cell processor above the raw PowerPC. Rather
than tune PowerPC for the Macintosh, it was tuned for video games and DVDs — a
different video niche than what Apple would like.
Tactically, therefore, Apple’s best retaliation is to talk to Intel and let it
slip into the news. It serves notice on IBM not to take Apple’s business for
granted. This is not unlike Dell’s tactics: Dell uses Intel chips; but then it
talks to AMD (discussed most recently on
May 2) and then, shortly afterward, it gets a bigger price break from
Intel when it “decides” to stay 100 percent with Intel chips.
It’s
nothing more than Dell firing a shot over the bow to Intel to negotiate better
terms. Dell also pursued a similar tactic when it started offering Linux
computers; in my opinion, a negotiating ploy with its sole OS supplier,
Microsoft.
The
newspapers are discounting that Apple using Intel is even possible. They see it
as a repudiation of Apple’s longstanding disdain for all things Intel (and
Microsoft Windows, despite the uneasy truce they have). It used to be that the
“little-endian/big-endian” issue made it impossible to switch, but I imagine
this is a solvable issue today (assuming it even still exists). On the other
hand, if Intel were to supply chips to Apple, it would be useful to Intel to
gain insight into how to tune a Pentium for the kinds of instructions which are
more important to Macintosh’s, compared with PCs.
With AMD
encroaching on its hegemony, Intel might we willing to overspend resources to
gain Apple’s two or three points of global market share. (After all, those two
or three points, meaning five or six in the U.S., are probably among the more
profitable points held.) If the talks between Apple and Intel are really taking
place and are serious (a big if), then Intel gains insight into where it needs
to go as PC/Macintosh users migrate to ever-more-video-related applications.
It’s useful free information, even if nothing ever happens.Â
If I was
AMD in this scenario, I would be out looking for a way to FUD PC customers into
thinking that Intel is not paying full attention to their market. Taking its eye
off the ball, so to speak.
The Apple / Intel
discussions are unlikely to be a catalyst for AAPL, INTC, or AMD. AAPL looks to
be reaching a buying climax (based on average increasing volume). If we see high
volume dip to with 1 point decline on a red candle, then I’d probably wait for a
light volume lift and a lower high to confirm the short trade back to $24 to
$25.
Melanie
Hollands
melaniehollands@yahoo.com
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