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June 13, 2005
Apple Intel: The Hidden Impact
It's been a week since Apple Computer and Intel presented their landmark deal, and my opinion of the deal has come a long way. When rumors began a few weeks ago that Apple may start using Intel chips, I was a skeptic. I couldn't see why Apple, after so many years of struggling to gain share in PCs, would risk its formula just when it was finally on a roll.
Now, I think the long-term potential could far outweight the near-term risk.
For starters, observers such as Om Malik have pointed out that once the "MacIntel" machines have arrived, those marketing mavens at Apple will be able to go to work on a nice, simple proposition for PC shoppers: that since both Macs and PCs run on the same basic hardware, the only real question for them to consider is whether they want the MacOS or Windows. Given the common perception that the Mac is superior, Apple should find more than a few takers (especially for the who-knows-how-many-millions of folks that will have iPods by then).
Timing will be on Steve Jobs' side to make this Coke-versus-Pepsi pitch. By the end of next year, Apple plans to release the Leopard release of the MacOS--around the time when Microsoft is supposed to finally deliver Longhorn. Given that Windows is already playing catch-up to Apple in key ways--say, in desktop search--it's hard to imagine that Microsoft will be able to leapfrog Apple's new Tiger release and match Leopard in terms of new headline-grabbing features.
Then there's the fascinating possibility of a dual-OS Macs, running both the Mac and Windows. Apple insists that while it won't stop anyone else from loading Windows onto a MacIntel, it has no plans to license, distribute or support Windows itself. Maybe not now...but it's certainly a beguiling idea. One of our TechBeat readers, McKoder@yahoo.com, suggests why Apple should change its mind. "People can't switch from Windows to Mac in one day, it has to be done over time, and in the overlapping time, few people can afford to buy two computers. The ability to buy only one new box and run old Windows apps plus new Mac apps on the new box is a winning strategy." Hey, if a "MacWinTel" ran without too big a performance hit, sign me up. Old PC users like myself could keep their Windows-based Quicken and Word files as is, but could take advantage of Apple's far slicker digital media apps, such as iPhoto and iMovies. Plus, we'd be able to run our iPods in Mac mode, where they belongs.
Others see even more earth-shattering reverberations from the Apple-Intel detente. The always provocative Robert Cringely thinks the partnership could be a prelude to Intel buying Apple. Personally, I doubt that's in the cards--mostly because I don't think Intel has to buy Apple to achieve its basic goal: to reenergize PC sales so it can sell more chips.
Which brings me to what I think could be the biggest impact of this partnership. Rather than a specific product or strategy, it has to do with the basic MO of the PC industry. The current approach calls for PC makers to cut their costs to the bone, and take their technology and marketing cues from Microsoft and Intel. Rather than innovate, PC makers like Dell and HP for the most part wait to see Intel and Microsoft's roadmaps, and often use their reference designs to create new products.
That worked fine in the 1980s and 1990s, when millions of businesses and consumers were getting their first PCs. Now, it's not so easy. Given the lack of gotta-have new PC features in recent years, there's clearly a missing link between the braintrusts at Intel and Microsoft, and real customers.
That's where Apple comes in. Sure, its TV ads and slick industrial designs are nice. But it's most essential skill may be its ability to pull together technologies to create products that fill customer's unmet needs. There's no better example than the iPod. If Apple and Intel end up being true partners that jointly develop products and align their technology roadmaps, they can vastly streamline the way new innovations get into markets. Forget all those icky concept prototypes Intel is always throwing against the wall--most of which "end up looking cheap versions of old Mac products,” as Intel CEO Paul Otellini joked during an interview just after the Apple news conference. Instead, Intel would have the folks in Cupertino to show them where to focus. As Otellini said, "We would all agree that the industry needs really interesting new products just to keep our customers happy. This is the best opportunity I’ve seen to do that in a long time.”
At the risk of taking this line of thinking too far, this partnership might even help the PC industry get over its nearly terminal case of Dell Envy. For years, companies such as HP and IBM (before the Lenovo spin-off, that is) have been caught in a depressing, hopeless cost-cutting exercise, to prove they can out-Dell Dell. If Apple proves that the Intel platform can be used to create higher-priced products with decent margins, other PC makers might be pressured to try some innovation as well. That would be good for everyone--especially consumers.
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BusinessWeek: Apple Intel: The Hidden Impact: It's been a week since Apple Computer and Intel presented their landmark deal, and my opinion of the deal has come a long way. When rumors began a few weeks ago that Apple may [Read More]
Tracked on June 14, 2005 09:30 AM