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Why Apple putting its own chip in its Mac is such a big deal

When Steve Jobs returned to Apple in 1997, he approved adverts sniping at Intel and unfavourably comparing its designs with the Mac’s Power PC chips developed by IBM.

By 2005, however, IBM and Apple had fallen out, and Jobs announced that it would switch to Intel (albeit, maintaining that the famous “Intel Inside” stickers would not appear on Macs). But the same year, Intel turned down an offer to develop chips for the iPhone, failing to see the potential of the smartphone market. Apple ordered processors on the chip architecture developed by Cambridge-based Arm and manufactured by Samsung. In 2008 – the year after the iPhone was released – it bought semiconductor start-up PA Semi, setting into motion a journey that culminated on Monday.

The iPhone is the huge revenue and profit generator and has got other businesses built on top of it. Over time, this will strengthen the ecosystem advantage that Apple has.

Geoff Blaber, an analyst at CCS Insight

Since the iPhone was released in 2007, Apple has steadily become one of the world’s most advanced semiconductor companies, and stuffed its devices with its own designs, rather than Intel’s off-the-shelf components.

The company boasts that its iPads match up to game consoles, and analysts compare its iPhones to desktop computers when it comes to processing power.

Today, Apple’s MacBook laptops and iMac desktops are alone among its products in relying on computer processors designed by another company. Changing this – what Cook called “a historic day for the Mac” – offers its own speed advantages. While techies were disappointed at a lack of statistical proof on Monday, Johny Srouji, an Apple executive, boasted that its new Macs would offer “the highest performance, at the lowest power consumption”.

Impressive demos showed power-hungry software like Photoshop and Tomb Raider running flawlessly.

Apple's reliance on Intel, the company whose chips helped shoot its former arch-rival Microsoft to dominance in the 1990s, has always been slightly uncomfortable.

Apple’s reliance on Intel, the company whose chips helped shoot its former arch-rival Microsoft to dominance in the 1990s, has always been slightly uncomfortable.Credit:AP

Crucially, Apple’s own chips are likely to cost the company far less than buying them from Intel. Apple’s new computers could be cheaper, more powerful, boast longer battery life and have higher profit margins. Chris Caso, an analyst at Raymond James, said he expected Intel to lose up to $US4 billion ($5.8 billion) in sales a year.

Ordinarily, this would be enough to make ditching Intel a no-brainer, even though the move, expected to take several years, does not come without costs (it is unclear, for example, how prized features such as a Mac’s ability to emulate Microsoft’s Windows, an advantage of Intel, will work). However, it is likely that Apple has another goal in mind. Switching Macs to Arm-based chips will not only distinguish them from most Windows machines, but it will also bring Apple computers closer to the underlying technology that powers its more portable gadgets.

The deal is a boost for Britain’s Arm, which has grown to dominate the market for smartphone processors.

Arm creates and licenses the underlying designs that go into processors. But getting into PCs represents a new market where it can tackle Intel. So far, Arm’s technology has just 0.4 per cent of the PC processor market versus Intel, according to IDC.

Apple revealed on Monday that an immediate benefit of the switch will be that Macs will be able to seamlessly run millions of iPhone and iPad apps.

Meanwhile, the Mac’s new computer operating system, Big Sur, has been redesigned to look and feel more like the iPhone’s iOS. Merging the iPhone, iPad and Mac is central to Apple’s strategy of sitting at the centre of people’s “digital life”, with services like its voice assistant Siri, health dashboard, and music and TV services.

Crucially, it could also see the business exercise greater control over the Mac, which is unique among Apple devices in allowing software to be installed without going through the company’s vastly profitable App Store, a gatekeeper that results in hefty commissions for app sales.

“[This is] a big advantage in ensuring the ongoing relevance of the Mac,” said Geoff Blaber, an analyst at CCS Insight.

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“The iPhone is the huge revenue and profit generator and has got other businesses built on top of it. Over time, this will strengthen the ecosystem advantage that Apple has.”

Apple’s Mac has often seemed secondary to the iPhone. By bringing it in line with its smaller sibling, Cook will hope to keep it fresh.

Telegraph, London

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