The big myth about the Intel transition

Posted by Dennis Sellers Jul 7, 2005 at 11:32pm

After Apple announced its plans to move the Mac line to Intel chips, Insight 64 analyst Nathan Brookwood said it was a bad idea. He told the San Mercury News that Apple lost market share every time it has made a major transition, such as in the mid-1990s when the company moved from Motorola’s 680×0 line of chips to IBM’s PowerPC chips. Brookwood added that such a move could frustrate some loyal customers of Apple.

“Every time they go and they change their architecture, a bunch of people who had been with them go, ‘This is too much trouble. The PC world has been pretty consistent, and Apple keeps changing’,” Brookwood says. In fact, he said Apple lost half its customers in the previous transition and will probably lose half this time around.

Brookwood asserts that, in the mid-1980s, the Mac had as much as 10 percent of the overall personal computer market, but when Apple switched from Motorola 68000 processors to PowerPC chips, the Mac’s share dropped to below five percent. And when the Mac’s operating system later changed to Mac OS X, it fell to below three percent, he adds.

There’s some fallacies in his argument, which the excellent MWJ, the “The Weekly Journal for Serious Macintosh” points out and which I thought I’d share with you (in summary form; you’ll need to read the entire lengthy report for details).

As MWF points out, when Apple’s board of directors fired CEO Michael Spindler in February 1996 and replaced him with Dr. Gilbert F. Amelio, Apple had just come off its biggest sales quarter ever: US$3.1 billion in revenue on sales of 1.3 million Macs. True, the company lost money in that quarter “due to horrible business systems, bad sales practices, and unwise discounting on consumer products, but there was clear and strong demand for Macintosh computers, two years after Apple shipped its first PowerPC machine,” MWJ notes.

So what about that declining market share? Mac sales were actually up, but its market share went down as Wintel sales rose even more (aided by the popularity of Windows 3.1).

Overall, MWJ is relatively optimistic about how Mac sales and the software transition will go over the next few years.

“The chances of a new Macintosh program working only on Intel systems in the next few years, barring some new hardware feature found only on the new systems, are slim to none,” they write. “In the best case, it will take years for Apple to sell enough Intel-based systems to equal the PowerPC installed base, and no sane developer is going to leave that much money on the table. Therefore, when the first Intel-based Macs arrive, everything available for the Macintosh will work on PowerPC-based systems, and some of it will work natively on Intel-based systems. Some programs won’t have Intel-native code until the subsequent major release, and some that are available with native Intel code won’t be as useful until critical plug-ins make the switch as well. The risk is buying the new system at that time, not in buying one today based on proven and well-supported PowerPC technology. Apple faces plenty of risks in this transition strategy, but customers, particularly those already using the Macintosh, face little or no risk in purchasing today’s PowerPC-based systems. Brookwood may not know that, but now you do. Don’t let ‘conventional wisdom’ displace your own logic.”

Thoughts?

Also, don’t forget this week’s Macsimum News poll. We’re asking, “If you normally attend Macworld expos, are you going to Macworld Boston?” The Macworld Conference & Expo in Boston will take place next week (July 11-14) at the Hynes Convention Center. However, the second year in a row, Apple isn’t participating.

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