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Thursday, June 23, 2005

Two Summer 2005 Shock from Mac

First Shock: Fantastic Mac Sales Growth

At recent Mac Software Developer Conference, Steve Jobs, CEO of Apple Computer announce that unit sales of Mac increase by 40% in the last year. That’s one hell of fantastic number in an industry where average growth is just 12% p.a. What does this number mean? It’s known that Apple only has computer global market share of just 3%. Apple sold about 3.5 million Macs last year, meaning the global computer market is about 115 million units.

With 12% growth, global computer market will be about 130 million units in 2005. And with annual growth of 40%, Apple will sell close to 5 millions Macs. That means Apple can get about 4% of global computer market in 2005. If this trend continues, in 2006, the global market will be about 145 million units, and Apple will sell about 6.8 million Macs. Then, Apple market share will become something like 4.7%. The year after that (2007), the global computer market will be about 160 million units, while Apple might sell about 9.6 million Macs, or about 6% market share. Of course, everything can change at will, since there will be a migration issue to Intel Chips starting 2006.

Second Shock: Apple Migrates to Intel

According to Jobs, there’s no future in PowerPC architecture (the chips used on Macs today). Jobs even said that Intel offers lower consumption of power than PowerPC (even when PowerBook baterry life is longer than average Intel based laptops).

Jobs announce that Apple will launch Macs with ‘Intel Inside’ in a year from now, and finish the transition by June 2007. At the same time, Jobs said that Intel offers ‘brighter’ roadmap than IBM did. It’s interesting when Microsoft, Sony and Nintendo went to IBM for their game console.

Apple have been developing OS X for (Intel) x86 chips in the last five years. Jobs shows OS X running on a Mac running on Pentium 3,6 GHz. Not only Apple has develops OS X for Intel, but almost all oher application has been redesign for both hardware systems.

Apple developet toolkits, Cocoa and Xcode, will make the porting of existing programs to the new hardware become much easier for Mac developers. Xcode 2 supports ‘fat binaries’ or codes that runs on both two different hardware architecture. Jobs try to convince Mac users that Apple will not leave Power PC Mac users behind. Apple software will continue to support PowerPC for a really long time. Part of the strategy is what is called ‘universal binaries’ or MacIntel version for ‘fat’ program for Classic Mac OS which has 680x0 code (for pre PowerPC Macs) and Power PC code (for Mac today).

Why Mac moves to Intel? Because Apple CAN!

Two reasons of Apple big decision:

  1. Most probably Jobs is fed up with Ibm because broken promise by IBM of 3 GHz G5 chips which never came about. Jobs, basing on IBM projections, already promised that speed on Power Mac G5 to come around mid 2004. But even in this time in 2005, PowerMac G5 still tops at 2.7 GHz. That’s still 10% less than what’s promised for last year. Even if according to Moore’s Law (processor chip doubles every 18 months), G5 speed should be by now approaching 4 GHz. What gives? Certainly IBM has a few production problems, mostly chip yields that is not so good (chips are not so perfect, or the speed is not as fast as predicted). Other than that IBM is developing new chips for Microsoft, Sony and Nintendo, all console game makers. The three companies is expected to order about 20 million chips per year. So economically Apple which only sell about 3 to 4 million Macs per year is not a big customer for IBM (in the near future). So IBM really has the technology that might supply Apple needs, but more importantly IBM doesn’t mind losing Apple in the future.
  2. Second reason is because Apple simply can. Pentium architecture has gone a long way since the 80286 chips used on DOS based PCs, in the era of early Macs. Pentium 4 performance are really on par with G5. Intel even offers more choices of types and speed of processor (like the Celeron line, for the entry level market). Apple secretly ports OS X and other Macs program to Intel hardware. Indeed, Next OS, the basis of OS X already runs on Intel before Apple acquire Next and Jobs.

Whatever the real reason, the final real world performance is good enough to be decisive, so that Apple is willing to migrate their whole computer line to Intel side, which has become industry standard. And it’s sound economically too, although I believe that Apple will pay higher for Pentium chips than IBM G5.

We’ll see interesting issue in the coming months and years:

  • Will MacIntel model use Celeron or Pentium, or even 64 bit Intel chips?
  • Will Intel add a processing unit to Pentium chips to enable a good AltiVec emulation.
  • Or will programs that used AltiVec will show slower performance?
  • What’s the difference of MacIntel with Windows PC architecturally?
  • And how long until someone found a way to emulate MacIntel architecture in standard (non Apple) Pentium or AMD PCs so that users of Windows and Linux can run OS X without having to buy a new MacIntel?
  • Can Apple put the red hot Pentium into a Mac Mini without resorting to noisy fans?

Other Important Mac / Apple Statistical Data:

  1. 1 million customers get into Apple Stores every week.
  2. iPod dominates Digital Music Player market share of about 76%.
  3. Apple Internet Music Store, iTunes has sold more than 430 million songs and dominates the legal Internet music sales market share of about 82%.
  4. Apple has sold 2 million of Tiger (the newest Mac OS X version 10.4), and it’s been used on approximately 16% in all Macs. (next OS X version is code named Leopard)


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