Applying the Midas touch to Mactel

Applying the Midas touch to Mactel

Summary: a recipe for market penetration - a way to reach Linux and Windows users who would otherwise never touch a Mac. It's also a recipe for market consolidation - strengthening the halo effect and locking in sales in the music, video, and related home entertainment markets

Before getting into what Apple can do to turn its Mactel mistake into the pure gold of market opportunity, lets take a moment to think about how it got here.

Lots of people have made the claim that Apple's issues with IBM as the G5 developer/supplier were focused around price and volume - with lots of commentators cheerfully rewriting history to say that IBM wrote Apple off as a bad customer.

That didn't happen -at least not until after Apple made its decision. What I think did happen was that IBM failed to meet Apple's needs on both volume and performance while claiming to be making best efforts to meet those needs. At the same time those best efforts were failing, however, it successfully designed and built a three core, 3.2Ghz, Altivec equiped processor for Microsoft and a 4Ghz capable Cell board containing a G5+ master control CPU (again Altivec equiped) for itself and its partners Sony and Toshiba.

From Apple's perspective, however, the credibility -whatever the legal realities- of IBM's claims must have seemed doubtful (especially when it turned out that Microsoft's cost on the 3.2Ghz three core machine would be a bit less than Apple's cost on a single core 2.7Ghz G5).

Worse: if, as I believe, G5 supply and advancement constriction was the stick for beating Apple, the carrot was an offer to make Apple a Cell partner -something that would give IBM almost total control over Apple's software and supply line while weakening Apple's competitive position vis-a-vis Sony.

As a result Apple's decision to drop IBM as a supplier amounted to chewing off a leg to escape a death trap - sensible in the circumstances and something which would have been a non issue if Plan B had been updated in the last few years and a better alternative architecture selected.

Unfortunately, however, Plan B hadn't been updated for years; they made the Intel decision, have now seen some of the consequences, and therefore face some tough choices.

Option one, of course, is to just push ahead and hope things turn around. It's not an impossible bet: Apple has the market momentum to muddle along until Intel makes progress, there's probably room for some compromise on price, Apple can push the heat and power use envelope to its limits on the iMac and MacBooks to get a small performance boost out of increased megahertz, Intel's new Macboards will be marginally harder to break, and the $1,100 iMac can be refocused as the better family entertainment center device replacing the $499 MacMini.

Option two, however, is much better. To see what it is lets start by looking at three laptops: two real ones, and one that might have been:

The MPC7448 is a uniprocessor, 32bit (but with 36bit addressing), machine starting at 1.7Ghz. It's been commercially available since last June, with the dual processor MPC8641D series based on the same e600 core becoming available in large quantities pretty much on the same schedule as Intel's "Yonah" line - meaning it's available now but production ramp-up is just beginning.

In the table below, therefore, I'm comparing two real Apple notebooks, the Powerbook G4 and MacBook, to a hypothetical one: an entry level Powerbook e600.

 Powerbook G4MacBookPowerbook e600
Screen (Resolution)15.2-inch TFT (1440x960)15.4-inch TFT (1440x900)15.2-inch TFT (1440x960)
Base ProcessorMPC7447A 1.67GhzIntel Core Duo (1.83Ghz)MPC7448 G4+ (1.7Ghz)
High end Processorn/aIntel Core Duo (2.3Ghz)MPC8641D (2.1Ghz)
Graphics Processor (RAM)ATI Radeon 9700 (128MB)ATI Mobility Radeon X1600 (128MB)ATI Mobility Radeon X1600 (128MB)
Base Price (USD, list)$1,999$1,999$1,999
base DENmark score537442 (=2 x 241)762
high end DENmark scoren/a560 (=2 x 280)1600 (Guestimated)
Estimated battery life (Claimed)4 hrs (5.5)3 (?)>4 hrs (>5.5)
Estimated CPU cost as a percentage of list price<4%>13.5%<4%

The MacBook should do a lot better on less CPU intensive benchmarks, but overall this is hardly a contest. That hypothetical Powerbook e600 series fits with Moore's law to protect the brand while giving Apple the ability to deliver a lot more for a little less.

So what can Apple do? Two things:

  1. Re-establish the Mac as a premium product by dropping Intel as a CPU supplier and signing a three to five year deal with Freescale to use the e600 and subsequent e700 series processors.

  2. Make the MacOS X integration shell and related Apple software available as a software only package for Linux.

Taken together these two steps would strengthen the brand while buying developer loyalty, a new revenue stream, time, customer confidence, and market position.

Doing this would give Freescale the resources needed to expedite the production ramp-up on both chipsets, reduce Apple's board costs by up to 50% (because networking and memory controllers are built in), let Apple protect and advance the PowerMac and X-Serve lines (because even the low end 7448 uses 36bit addressing) and give Apple's customers back their traditional price, performance, design, and security advantages over Wintel.

Doing this splits Apple's computer business into two lines: one offering software and support for Lintel; one offering premium "it just works" packages built on Apple branded PPC hardware. That opens major new markets for Apple's developers and directly extends Apple's own markets and customer base into the Linux community.

This is a recipe for market penetration - a way to reach Linux and Windows users who would otherwise never touch a Mac. It's also a recipe for market consolidation - strengthening the halo effect and locking in sales in the music, video, and related home entertainment markets.

The key to all of this, of course, is customer confidence. What happens if Steve Jobs gets up in public and says "oops!"? The answer is well known, if counter-intuitive: customers trust companies that take responsibility for their mistakes. That's the fundamental lesson Procter and Gamble taught the world in the contaminated Tylenol case.

Bottom line? Steve Jobs, and Apple, could apply the Midas touch to MacTel simply by killing it -producing a far better outcome for Apple than the best they can hope for in sticking with Intel.


Topic: Apple

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  • Freescale had their chance

    Freescale was around and in-contention when Apple made their (latest) deal with the devil. Why didn't Apple jump on it in the first place? The roots of this decision go back to the begining, when Apple, IBM and Motorolla came together to form the PPC alliance. The idea was share and share alike to promote PPC everywhere. Motorolla was quite happy with this arraingement, but IBM was not. IBM forked the development of the PPC because of their late start into the RISC/UNIX marketplace. So, while IBM was making better and better chips for their workstations/servers - they gave lip-service and SLOOOOW progress in evolving the Mac PPC chips. Motorolla did NOTHING to "up the ante" - NEVER becoming a leader in the PPC development. SO Apple had a partnership with a welcher and a wimp. Now that Motorolla split its PPC unit off into Freescale, can you trust them to deliver BETTER processors (revolutionary vs. evolutionary)? This new PPC from Freescale MIGHT look great, but their history says that loafing and status quo are their company values.

    If you want to make deals with small fry, why not MIPS? Make the deal with SillyGraphics that you could NEVER seem to do with Sun. This would boost ALL of the companies - more so than the original PPC alliance. Maybe give MATROX a shot at the graphics . . .
    Roger Ramjet
    • Motorola went NT - like HP, and is now hurting

      Back in about 98 the NT fanatics won the battle at Motorola - leading to massive internal change and a loss of R&D money behind PPC. Motorola, you may recall, nearly managed itself into Chapter 11 over this period.

      However, when Freescale got spun-out, their management did the opposite and they're a booming business.

      So you're right: Apple could not deal with Motorola, but they can deal with Freescale.
    • Exactly

      Apple went to IBM because Motorola repeatedly overpromised and
      under-delivered (both on performance and quantity). So now all of
      a sudden they'll be able to deliver? Fool me once, shame on you....
      tic swayback
      • Freescale is not motorola

        Motorola's top management got themselves out of the PPC business - and now get to watch world+dog move to it.

        Freescale is 100% behind the PPC - and doing very
        well at it. Yes, it's a spin-off, but no, it's not the same people making the decisions.
        • I'd still be hesitant

          Call it whatever name you'd like, they've already failed Apple once.
          Given the repeated nature of this problem for Apple, I think going
          with the biggest and most likely to deliver chip supplier is not
          unreasonable (although it's beginning to look like a curse, as Intel
          may be having supply problems as well).
          tic swayback
  • Linux? Where did that come from?

    "2. Make the MacOS X integration shell and related Apple software available as a software only package for Linux."

    You had me when you were focusing on hardware, the Freescale processors and the like, but this comment about Apple software on Linux came out of left field. What does it have to do with the rest of your argument?
    Accidental Angel_z
    • Lintel offers for a home for mactel

      While permitting the PPC Mac to maintain its premium status.
      • What do you mean by "a home for Mactel"?

        Maybe I'm dense, but what do you mean by "a home for Mactel"? A home in what sense?
        Accidental Angel_z
        • hes suggesting

          hes suggesting moving Apple back to PPC which means ditching what intel already exists... and proposing how to find a home for it...
          • I.e., what Apple should do with existing Intel inventory?

            I don't see what Apple gains by that, though I'm sure Linux partisans would like to use that oh-so-shiny hardware. But even if Apple were to do such a sudden about-face, they've shown no qualms in the past about abandoning particular hardware form-factors and architectures after selling off existing inventory. does a particularly good job of cataloging these evolutionary cul-de-sacs if you want to review the record.
            Accidental Angel_z
      • Not required

        Darwin is already native and supported on PPC and Intel.

        Lets face it, though I'm a big Linux and Mac user the big revenue
        market is windows not Linux for the desktop.

        As the kernel is GPLed much of Apple's low level infrastructure
        would also have to be GPLed - I'm not sure Apple wants to do
        this - though we'd all benefit enormously;-)

        What makes more sense if Apple is going after revenue would be
        to port Cocoa to windows and produce Apples apps for that
        platform. The iLife and iWork suites are great and priced very

        Darwin -> Windows Services for UNIX (if extended to the
        desktop) or Cygwin

        QT - QT already ported

        Core Image/Video/OpenGL - Vista Windows Presentation

        Core Audio - ???

        Carbon - Not necessary for Apples newest software

        Java - already ported would use same Cocoa bindings

        But I'm happy the way things are. Apple's growth is impressive
        and there is no fear they'll disappear anytime soon (even the
        beleaguered article have disappeared).

        That the windows users bleat about how they can't afford a Mac
        suits me. I get a great laugh out of the windows users calling for
        help with problem after problem whilst my Macs power on
        (much to their annoyance).

        The issues I experience on my Linux desktops, and there are
        many (groan), I at least have the satisfaction of knowing I didn't
        have to pay abusive monopoly prices for it.

        QT for Linux and a port of the Cocoa framework would be nice,
        but for revenue maybe a windows NT kernel port first.
        Richard Flude
        • Most of Darwin APSL, not GPL

          Just a minor nitpick: Most of Apple's own Darwin code that is not governed by an existing license is released under the Apple Public Source License, found here:

          Not being a lawyer or a license wonk, I won't even try to determine or explain the differences.
          Accidental Angel_z
  • Missing a real key

    Seems to me, one of the real boost being offered here is the
    ability to run Windows on a Mactel as well as OSX.

    One of the main reasons people are so hesitant to switch is
    having to re-buy all of their expensive Windows software. Plus,
    there are lots of Windows-only games, and there are lots of
    businesses reliant upon one obscure piece of Windows-only

    By selling a machine that can run both, Apple figures to pick up
    marketshare from these fence-sitters. It may only be a few
    percentage points, but from where Apple is sitting now, that's a
    huge increase.
    tic swayback
  • Daystar G4 upgrade announcement

    From MacNews: ( )
    One of the reasons this is interesting is the fact that this uses the older 47/A CPU set - not the new 7448. I don't know of course how realistic the claims are but.. FYI:

    -- Daystar Technology today introduced its XLR8 CPU upgrade for the Aluminum PowerBook G4 systems, delivering up to 40 percent more speed for owners of most PowerBook G4 systems. Users place the PowerBook in a provided box, after which shipping, testing, installation and quality assurance is handled completely by Daystar's Apple Certified Technicians. The upgrade uses the latest Freescale PowerPC (7447a/b) processor, improving xBench 1.2 Scores jump from high 20's to over 50. Daystar claims the upgrade makes G4 PowerBooks run over twice as fast as Intel-based systems running current Mac PowerPC applications and that QuickTime encoding is up to 30 percent faster than Apple's first Intel-based iMacs. The XLR8 MAChSpeed G4 Aluminum CPU upgrade is available for $500 (with three-way shipping), and works with most Aluminum PowerBook G4 systems. It runs at either 1.92GHz or 2.0GHz, depending on the original clock speed of the system.

    And, of course, Apple announced further delays yesterday -
  • give me a break...

    one, Apple didnt make any mistakes, moving to Intel was the best thing they have done in a long time.

    i dont see your chart meaning anything at all really. The best performing processor you have listed on there is the Core Duo, it smokes the other two processors, at least in performance. Sure the other two use far less power, but they cant keep up in actually getting work done fast.

    Unless you think "DENmark" is a rating of processor performance. Its not. Even DENmark rates a 1.4ghz G4 about 150 points higher than a 2ghz G5

    the Core Duo will perfrom just fine for a mobile computer with battery life, and run circles performance wise around the other two. Price isnt everything. Most people that buy Macs arent looking for cheap computers, they are looking for ones that work well.
  • Yawn.

    Yet another 'I know whats better for Apple more than Apple does' story.

    So boring.
  • Was Sun in the Picture

    Sun Microsystems is doing some interesting work in chip
    development. Did Apple ever consider adopting SPARC wholesale or
    using Intel for the home theatre end of its operation and adopting
    SPARC for its high-end offerings?
    • Don't think so - and should have been

      There were merger talks in the 90s and early 2000s but - to my knowledge- nobody at Apple thought much about using SPARC recently. That would, have been a far better chocie than Intel today and should, I beleive, be Apple's future direction.
      • But ....

        Is Sparc suitable for laptops ... ?
        • NextCom does

          NextCom makes SPARC laptops. See more at