Macs to get
Intel inside

When Motorola was the primary supplier of G4 chips for Macs, Apple grew frustrated with the rate of improvement. In 2002, it signed a deal with IBM to provide advanced chips for its high-end desktop computers, the Power Mac G5.

But the IBM-Apple deal was rocky almost from the start.

Jobs said Macs would top 3 gigahertz in processing speed by the end of last year, but IBM could not deliver. The IBM chips also were scarce for desktop computers and nonexistent for notebooks, which by some measures have now begun to outsell PCs in the United States.

They simply ran too hot and consumed too much electricity for portables.

Analysts were skeptical about the Apple announcement.

In the past, major transitions have led to defections by customers and software developers, said Nathan Brookwood, an analyst at the research firm Insight 64.

In the mid-1980s, the Mac captured as much as 10 percent of the overall PC market, he said.

But when Apple switched from Motorola 68000 processors to PowerPC chips, the Mac’s share dropped to below 5 percent. When the Mac’s operating system later changed to OS X, it fell to below 3 percent.

“I have a lot of trouble understanding why they would do it,” Brookwood said of the transition to Intel processors. “Unless there’s something magical, I would have to believe it’s not a good move.”

By wrestling away Apple’s business from IBM, Intel gains further dominance of the PC processor business. It currently has 80 percent market share.

Paul Otellini, Intel’s new chief executive, said the chip maker was pleased to have Apple’s business.

“I suspect there is a whole bunch of you that never thought you would see this logo on this stage,” he said onstage with Jobs. “I was one of them for a while.”

Although IBM and Freescale suffer a setback with the loss of Apple, Mac chip sales were just a fraction of their total semiconductor revenues.

Recently, IBM has signed deals to provide the chips for the next-generation video game machines of Microsoft, Nintendo Co. and Sony Corp.

A new microprocessor that IBM co-developed with Sony and Toshiba Corp., code-named Cell and planned for Sony’s next PlayStation console, is being touted as capable of delivering 10 times the performance of today’s PC processors.

In a memo to employees, Freescale CEO Michel Mayer said Apple’s business represents only 3 percent of the company’s revenues.

“It is increasingly clear that the center of technology innovation is moving away from the personal computer,” Mayer said. “The phase-out of this business now gives us the opportunity to focus more on the higher growth segments of the semiconductor market where our portfolio is a good fit.”

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