Apple Rumored to Be Closing Intel Deal

CUPERTINO, Calif. – Apple Computer might be breaking with its longtime chip manufacturer, IBM, and joining forces with Intel, sources said this weekend.

The move could conceivably up Apple’s market share, giving the creator of the Macintosh and the iPod access to the same volume discounts enjoyed by rival Dell. Apple does use Intel chips in its XRAID Server, but a consumer-level chip swap would almost certainly drive down the prices of Apple products and increase its less-than-two percent toehold on the home computer market.

Apple introduced the Macintosh in 1984. Always a trendsetter in the computer industry and a favorite among graphic artists and the early desktop publishing market, Apple’s sales were hobbled by its refusal for many years to divorce its operating system from its hardware, unlike Microsoft, which allowed other manufacturers to license its operating system for use with their own computer hardware.

Apple’s fortunes improved with the 1998 introduction of the iMac. Its stock quadrupled when the iPod debuted in 2001.

Rumors of an Apple shift to Intel have circulated for years, with most pundits dismissing the possibility except in the case of the Cupertino firm facing bankruptcy. It was reported in 2003, for example, that Apple was considering shipping a dual platform machine with both IBM and Intel chips so that a user could switch from a Mac to a PC environment on the same computer.

Apple recently recalled 180,000 laptop batteries as fire hazards and announced that its iTunes would soon feature PodCasts. Despite these two major recent announcements, company spokespeople are being cryptic about the putative Intel deal, classifying it as a rumor but not denying it.

The transition would create a problem in backwards compatibility before Apple saw the financial rewards. For older Mac programs to work with Intel chips, it is believed that the code on which the applications are based will need to be recompiled.

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