The incident began Monday when ATI, which supplies graphics cards for all Apple's current models, issued a four-paragraph news release that stated its Radeon processor would be featured in three new Mac models -- none of which were announced by Apple (aapl) until CEO Steve Jobs' Wednesday morning keynote address.
"In a keynote, wait for Apple to announce three new systems with ATI graphics in them. One will be an iMac with the RAGE 4XL chip, the remaining two are PowerMacs which will ship with RAGE 128 PRO standard and RADEON," read the statement , which was issued through Business Wire Trade Show Services in association with Expo convention management company IDG World Expo.
Sources said Apple executives -- including Jobs -- were livid over the incident. "Steve was beside himself," said one executive close to the issue who asked not to be named. "Steve has been so careful to hide any details -- even the smallest of details such as the number of new products to be announced -- something like this really can ruin things."
In the ensuing debate -- "the blame game," as one person close to ATI called it -- ATI said the statement was not to have gone out until late Wednesday and Business Wire Trade Show Services was at fault. Business Wire Trade Show Services denied responsibility, according to sources, and said ATI was fully aware the statement would be released before Jobs' speech.
"Steve didn't care who was to blame," an ATI staffer said. "It leaked, and that was all he cared about. He was so upset, he wouldn't even directly talk to anyone at ATI. Everyone talked through mediators, and that made the whole thing just an even bigger mess."
The immediate fallout of the incident: Jobs ordered all Radeon boards be pulled from Macintosh PCs in Apple's booth, removal of any mention of ATI products from his keynote address on Wednesday and the cancellation of a keynote demonstration of the new Radeon graphics chip.
Sources close to the situation tell MacCentral the ATI demonstration was to have taken place in the first 45 minutes of the keynote address and was to have included an ATI representative on stage to put the Radeon product through its paces.
MacCentral has confirmed that based on the configuration of certain models and their associated peripherals in Apple's Expo booth, early versions of Radeon graphics boards were removed from Power Mac G4 systems. All current systems are using the Rage 128 Pro product and associated drivers.
In addition, a Pricing and Configuration Reference Card being used by Apple-badged employees in the company's booth shows that while Apple was originally planning on offering the ATI Radeon graphics card as an "Option available at the Online Apple Store," its mention has been hand-scratched out. When asked why the ATI product reference was deleted, one Apple employee simply said, "Why do you think?"
ATI sources are playing down the incident, saying that while the company was to have shown the new Radeon card in limited quantities in Apple products at Expo, the final product is not yet ready for release. Actual production of the card is said to be somewhat behind schedule; in addition, software drivers are still in beta testing.
ATI said the AGP version of the Radeon Mac Edition card will ship in September, and the PCI version will arrive a few weeks later.
The new cards will come equipped with 32MB of double data rate (DDR) memory as well as support for both VGA monitors and digital flat-panel displays. The card can support resolutions up to 1,920 by 1,440 pixels and supports wide screen formats. Configured with ATI's RAGE Theater chip, the Radeon Mac Edition also features video-output capabilities, allowing users to connect the Radeon Mac Edition to a television screen.
The conflict with Apple couldn't come at a worse time for ATI, since two other graphics-card makers recently stepped up their efforts to become Apple's preferred graphics standard or at least build-to-order options.
Thornhill, Ontario-based ATI has been criticized recently for trailing rivals 3dfx Interactive Inc. and Nvidia for new innovations. 3dfx recently introduced new Mac models, and Nvidia has pledged Mac support for its cards by year-end.
Market analysts recently quoted by Bloomberg News speculated ATI could lose some of its Mac business to Nvidia, prompting ATI to issue a July 11 press release stating that "its longstanding business relationship with Apple Computer Inc. remains strong and is a core aspect of ATI's business."
Neither Apple nor ATI representatives would comment officially on the issue.
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