Apple & Chip Fab
Over at Roughly Drafted, Daniel Dillinger muses on why Apple would buy out PA Semi. It’s an interesting line of thinking and it raises some awesome questions. Foremost among them is, why is Apple buying out a chip design group that specialized in varieties of the PowerPC architecture? This is an important point to ruminate on, as Apple just invested heavily in making the switch to Intel’s x86-based Core chips for their hardware.
Mr. Dillinger goes on to speculate on Apple’s reasoning behind this — and eliminates the concept of a PWRficient chip in desktop macs, as well as in mobile applications (notebooks, iPhones, etc.). He then moves on to speculate that Apple will put chipsets in its boxes for the purposes of hardware acceleration, which seems the most likely line of reasoning.
But the question becomes: why?
Why is Apple going to go through the effort and extra cost of adding hardware acceleration to its machines, when it just spent the last decade moving to standardized PC RAM and Intel chipsets to take advantage of the economies of scale?
Apple has several different products generating revenue streams — iPods, the stream for which is slowing due to saturation of the market, it’s Mac hardware, iPhones, and….OS X.
Every point release of Mac OS X runs Apple users $129 for the upgrade. In my case, that’s a price I am more than willing to pay, as I have always had very agreeable experiences with the upgrade.
So three things come into my mind:
1. OS X runs on Intel hardware.
2. Apple will differentiate it’s own Intel boxes via hardware acceleration.
3. There’s hundreds of millions of Intel-based PCs out there on the market that represent an amazing sales opportunity for Apple.
Apple is going to insulate its hardware sales by differentiating them from typical bland-box hardware using PA Semi’s capabilities to design hardware accelerator chips. And then make Mac OS X 10.6 available for all Intel hardware, not just Mac boxes.
In 2009, when Mac OS X 10.6 is being released at MacWorld, they’ll talk about hardware accelerated Macs. Then they’ll talk about Mac OS X 10.6, and then the “one more thing” at the end of the show will be the announcement of 10.6 for Wintel legacy hardware, for the same $129 that it costs regular Mac users to upgrade.
And they’ll make a killing on sales of Mac OS X to people who are sick of the Windows cycle but don’t have the money or desire to change out their hardware. At this point, Apple can simplify its product line by killing the Mini, which will be supplanted by $300 Dells and Gateways, and make the money back via OEM licensing.
