Wednesday, January 11, 2006

Apple Presents New Macs Using Intel Chips

SAN FRANCISCO - Apple Computer Inc.'s historic shift to Intel microprocessors came months earlier than expected as CEO Steve Jobs debuted personal computers based on new two-brained chips from the world's largest semiconductor company.

The company's stock shot to a 52-week high as Tuesday's news coincided with word on impressive holiday sales numbers for Apple's hugely popular iPod music players.

The first Macs to deploy Intel Corp.'s Core Duo processors will be the latest iMac desktop, whose circuitry is all built into the slim display, and the all-new MacBook Pro laptop.

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When it announced the massive switch in June, Apple said it expected to begin making the transition by mid-2006. On Tuesday, Jobs was joined at the Macworld Expo by Intel chief executive Paul Otellini to unveil the new jointly designed computers.

The shift comes as Apple is on a tear with its iPod players and iTunes Music Store. The company had a record $5.7 billion in sales during the holiday quarter as it sold 14 million iPods — nearly three times as many as it did in the same period a year ago. Apple to date has sold more than 850 million songs and 8 million videos at its online store.

But Tuesday's focus was on Apple's Macintosh computers, and the repercussions could be enormous for other major industry players including Microsoft Corp.

For one, Apple erased concerns that its Macs lag behind Windows-based PCs in performance. Jobs said Apple's entire Mac line will be converted to Intel by the end of this calendar year — a move analysts say could boost Apple's computer sales, which cracked 4 percent of the U.S. market last year after hovering around 3 percent.

"Companies don't typically under promise and over deliver, and that's exactly what Apple has done," Sam Bhavnani, analyst with Current Analysis, said of the early launch.

For years, Apple shunned Intel, which has provided chips that power a majority of the world's PCs along with Microsoft's Windows. In the late 1990s, Apple even ran TV ads with a Pentium II glued to a snail.

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But Apple, looking for faster, more energy-efficient chips, became increasingly frustrated in recent years as its chip suppliers, IBM Corp. and Motorola Corp.'s spinoff, Freescale Semiconductor Inc., failed to meet its needs.

Of particular concern was IBM's apparent inability to develop a G5 chip that would work well in notebook computers.

Intel, on the other hand, has been focusing on developing chips specifically tailored for notebooks. In 2003, it launched its Centrino notebook technology with a processor that boosted battery life by minimizing its power demand without hurting performance much.

During last week's International Consumer Electronics Show, Intel unveiled the latest generation, the Core Duo, which features two computing engines on a single piece of silicon.

It was that chip that the Apple decided to fit into the new iMacs and MacBooks.

Though the change to Intel has occurred faster than expected, it still poses some risks.

Besides potentially alienating a fan base that's accustomed to doing things differently, Apple's move opens up the issue of backward compatibility and the possibility that PC users might run pirated versions of Mac OS X, Apple's critically acclaimed operating system, on their generally cheaper non-Apple computers.

Jobs demonstrated new software, called Rosetta, that will let owners of the new Intel-based Macs run older applications. But he did not comment on how the company will lock its operating system to its hardware.

With Intel processors inside the new Macs, their owners could choose to run Windows and software designed for it at full speed.

Though Windows sales could benefit, Microsoft risks losing ground unless its operating systems keep up with the Mac OS X. Windows Vista, the next major update, won't be available until later this year — and its promised features copy many of those already in Mac OS X.

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The change does not, however, appear to have alienated Microsoft, which offers a Mac version of its popular Office productivity suite.

"We're formalizing our commitment to this platform," said Roz Ho, general manager of the Microsoft's Macintosh Business Unit. "We'll continue shipping Office (for the) Mac for a minimum of five years."

The new iMacs will have the same all-in-one design and screen sizes as the previous models, with prices ranging remaining steady at $1,299 for the 17-inch model and $1,699 for the 20-inch computer. Jobs claimed the new models are two to three times faster than the iMac G5, based on an IBM chip.

"With Mac OS X plus Intel's latest dual-core processor under the hood, the new iMac delivers performance that will knock our customers' socks off," said Jobs.

The MacBook Pros — with 15.4-inch displays — start at $1,999. Jobs touted it as the thinnest and fastest operating laptop in Apple's portfolio.

All the new computers will include Apple's Front Row software and a remote control, which lets users watch videos, listen to music or browse photos from across a room.

The machines also will be bundled with Apple's newly announced iLife '06 suite of digital lifestyle programs. In one of the updates, the latest version of iPhoto will let Mac shutterbugs share pictures much like bloggers, and podcasters share content.

"This is podcasting for photos," Jobs said.

With a few clicks, users can post an online feed to which others — including Windows users — can subscribe. As changes are made to the album, subscribers automatically receive the updates.

The iLife suite also will enable the one-click export of video to iPods as well as a simple, drag-and-drop method of creating DVDs. The program also will support third-party DVD burners. Another iLife program, iWeb, helps users build Web sites.

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Shares of Apple closed at $80.86, up $4.81, or 6.3 percent, on the Nasdaq Stock Market. Shares of Intel fell 35 cents, to $26.12.

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