Is Apple Ready To Switch The Mac To Intel Chips?

The rumors fly. Apple and Intel are talking. The stock market gets a lift. Speculation runs rampant. What’s all this about, Alfie? Well, if the truth be told, it’s business as usual for Cupertino’s favorite Mac maker.

You’d think it was a slow news day. Fighting in Iraq. Apple CEO Steve Jobs takes a poke at Micosoft Chairman Bill Gates during Walt Mossberg’s “D” conference. iPod now has about 75-percent market share. What else is new?

Oh, Apple’s going to dump IBM.

Last week’s news was better. Sony will use the new IBM chip in the next generation Playstation. The week before it was Microsoft announcing they’ll use the new IBM chip in the next generation Xbox.

Now there’s “news” that Apple is talking to Intel.

Desperate Housewives plots are no more twisty and curvy plots than what goes on with Apple these days.

Is Steve Jobs ready to dump IBM and move his chip buying business elsewhere? I think so. Though it may not be what you’ve read in the papers.

First, Steve, Apple, and Mac users got screwed royally by PowerPC chip maker Motorola a few years ago, when Moto got stuck on 450mhz for about 12 years. Meanwhile, Intel continued to pull the wool over PC user’s eyes by upping the megahertz race to a gigahertz race.

Then, Steve announces new IBM PowerPC G5 chips for the Mac. Guess what? They’ll be at 3ghz in a year. Except it’s been two years and we’re still not there yet. And there’s no G5 chip in sight for the PowerBooks (remember, laptops make up about half of Apple’s computer business).

What happened to IBM?

First, they couldn’t deliver the goods they thought they could. The move to 90 nanometer product was not trivial. Troubles abound and there’s still no upward movement in chip speeds. And there’s no COOL G5 chips (used for mobile computing) anywhere but the latest Apple wish list.

Second, Microsoft and Sony come knocking and fall in love with the latest IBM PowerPC and Cell chip brochures. Who sells more units? Apple? Or Microsoft’s Xbox and Sony’s Playstation?

Apple gets the short end of the stick. Again. First, Moto, now Big Blue.

Is Steve Jobs pissed? You bet. He’s often pointed out that Macs are more loved by users because they work better. Macs work better because Apple designs the whole package. Software. Hardware. The works.

There’s just one catch. Apple doesn’t build the chips. And the chip building business is not for the faint of heart. There are few manufacturers capable of building an Intel Pentium or a PowerPC G5-class chip. IBM. Intel. Hmmmm. Anyone else?

Freescale.

Who’s “Freescale,” you just said to yourself. Well, Freescale is what used to be Motorola’s PowerPC chip building business. They spun off the money-losing unit a year or so ago, changed the name to Freescale (the domain name was available), and the spin-off from Moto has been building more and more chips ever since.

The chips inside PowerBooks, iBooks, eMacs, mostly come from Freescale these days. They’re relatively fast, compatible with Mac OS X Tiger, and inexpensive. But they’re not G5s.

“Freescale is just getting some traction in the marketplace (over the past year revenue is up, profits are up, stock price is up) so the time for a bold move, an acquisition by Apple, is now.”Does Freescale have what it takes to make a competitive chip? How does Freescale enter the “Apple talks to Intel” conversation? All valid questions, Grasshopper.

Yes, Freescale could build a very competitive chip. They need the right customer. What about Apple talking to Intel? It’s a diversion. It’s to show the world (of chip makers) that Cupertino has choices. It’s to get some leverage with IBM.

It’s also a smokescreen of sorts.

Apple really wants to buy Freescale.

Think about it. Not only would they have complete and full access to the chip designing and building process, they’d begin to take back some of their own destinty and put it in Apple brochures (and products), where it belongs.

Freescale is just getting some traction in the marketplace (over the past year revenue is up, profits are up, stock price is up) so the time for a bold move, an acquisition by Apple, is now.

Franky, Apple can afford to buy Freescale. FSL’s market cap is less than $3-billion. By contrast, Apple’s is over $30-billion. Apple has over $7-billion in cash. This is doable with Steve’s company American Express card.

Apple needs to control all the pieces. It’s in Steve Jobs’ DNA. Innovate. And control. The only two pieces Apple doesn’t really control are chips and product manufacturing. There are few chip manufacturers of the scale Apple needs. Freescale is one. There are plenty of hardware manufacturers.

Think about it. Apple will buy their own chip-making company. It could happen.

What say you? Tired of IBM’s promises (and Steve’s)? Tired of Intel’s propaganda inside? Do you think Apple could use it’s own chip, designed and built by Apple employees?

Share your thoughts with other readers. Click the Comments link below.

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