I suspect this is Apple's response to a phenomenon originating from China. I've been reading up about the Chinese knock-off cellphone, or "shanzhai phone", industry. It has become an incredibly lucrative business. Why? Because, it's now possible for a company, comprised of a small group of 3-5 people, to design, build (or rather contract to a factory), and market phones. The technology has gotten to the point where most of the difficult technical design hurdles have been removed by the presence of a cellphone-on-a-chip so-to-speak. Sound familiar to anyone around here? So you have these tiny, agile startups being able to compete with the big boys. A lot of the big boys are still in denial, and will probably try to respond to the shanzhai phone industry by attempting to get the Chinese government to crack down on it. Not Apple; their approach will be to out-innovate these players by playing off the one weakness that they have: that they cannot design their own cellphone-on-a-chip.
I won't make any predictions about whether Apple will still be a dominant player in the cellphone market 10 years from now. However, I will say that this move almost surely guarantees they will still be in the game by then. Other companies that rely on the same logistics and supply chain that the shanzhai guys do probably won't be as lucky unless they change their strategy as well.
I wonder where these shanzhai guys are getting their firmware, because that's probably a lot more expensive than designing the hardware. Are they just bootlegging it?
Usually bootlegging - many 'clone' phones use a re-themed and modified Windows Mobile 6.
What's interesting is that with Google Android, the phone OS is now an open game. However, Android requires significant CPU horsepower generally not found in Chinese phones.
It didn't work out because Apple didn't have the in-house talent to pull it off. They had to rely on IBM and Motorola to do the actual chip design, while Apple focussed on creating the software for these chips. IBM and Motorola started to lose interest in promoting PowerPC in anything but the embedded space and server markets.
This time around, Apple has brought all the talent they need to do all of the design in-house. No more design-by-committee. We're dealing with Steve Jobs after all ;)
Building a processor that can compete with the x86 juggernaut is expensive. Look at Intel's budget -- they have the production capacity and engineering resources to do pretty much whatever they feel like doing.
For Apple to attempt to compete with Intel, it would need to be willing to invest billions of dollars just in fab technology with a minimum of 3-5 years before seeing any return on that investment.
And Apple doesn't have the volume... so it wouldn't get the return on investment.
So Apple worked with IBM and Moto, but weren't buying enough CPU's from either one to make much of a difference, so after Jobs ended the clone program, the PPC consortium focussed primarily on embedded computing, in particular networking. Apple wasn't big enough to merit a custom chip, so it had to make do with a chip designed for a network router.
And so on...
What they're doing with this in-house design probably differs in several ways.
One is that it's probably aimed at a hand-held device, or something in a similar form factor. As such, it doesn't need to be able to compete with Intel's flagship x86, so Intel's technology edge isn't a factor.
Two is that being aimed at a hand-held, it's going to be small -- which means a lower cost for manufacture. So it doesn't have to have Intel's manufacturing capacity to gain from economies of scale.
Three is that it doesn't require that Apple builds its own fab; it can develop a design in-house and bid it out for fabrication to any of the big fabrication shops out there, like Chartered, UMC, TSMC, Samsung, etc. The fab process won't offer the same performance (i.e. clock speed ramping) as those of AMD and Intel, but in the hand-held market, that's a lot less important than minimizing power consumption.
And if the first fab partner can't keep up, owning the design means that Apple can follow Microsoft's example and hire a 2nd fab partner to boost production.
I guess that's a long winded way of agreeing with you, but there you go :)
Part of the deal with IBM & Motorola was large chip sales thanks to all the Mac Clones. When Steve killed them off, there was little more investment in Apple's CPUs.
But, Apple's been designing custom support chips forever, so this isn't completely out of line for them.
This is extremely inspirational. 9oliYQjP, I can't find any contact info for you. I'm currently looking into the mobile market right now, and would like to chat a bit. If you're open to this, can you email me at mark|at|markbao|dot|com?
I'm afraid I wouldn't have much to talk about. This is just a a casual interest of mine. If I see a story in the media about this sort of thing, I'll read it. And where I live, there's the infamous Pacific Mall which often has shanzhai items of all sorts. But I'm by no means a mobile expert. You'd be better off asking around at howardforums.com or something. I mainly got interested in the topic because a few years back I had a friendly bet with a friend who works at an Asian mega-corp which makes cellphones that they should start paying attention to Apple. But they had their attention on the knock-offs instead.
They were totally caught flat-footed by the iPhone. Apparently their last annual meeting fell just after the launch of the iPhone 3G. When their cellphone head honcho got up to talk, apparently he took a visible sigh and essentially admitted that the high-end market, which they want to be in during the recession (focus on profit margins not unit sales) was essentially stolen from them by Apple, and that their growth numbers in this segment had been slashed. They're essentially ceding the market to Apple in the short term while they go back to the drawing board and try to get the software part right. In other words, what Apple did to them in the MP3 player market is happening to them in the cellphone market. Keep this in mind the next time somebody tells you it's foolish to think that iPhone OS won't be the defacto mobile platform in 3 years time.
Another case where a computer manufacturer ended up designing their own CPUs was the UK company Acorn, developer of the BBC computers. A couple of existing in-house staff, one the author of BBC BASIC, sat down and came up with the first RISC design intended for home computers; the Acorn RISC Machine, now known as ARM.
After a while, Apple came on board and the technology was spun out of Acorn into the new Advance RISC Machines Ltd. with Apple as a shareholder.
When I first read this, I thought "old news." Then I realized that most of Apple's custom IC development work I rememeber was during the 68k and PPC eras. Since Apple migrated to Intel, they've been using third-party provided "north/south bridge" chips and BIOS hardware (albeit a less commonly used version.) Being a hardware focused company, rather than software, doing this kind of design work in house has historically been first nature to them.
The suggestion that the move is "also an effort to share fewer details about its technology plans with external chip suppliers..." fits Apple's MO: keeping the lid on future directions.
For the long run it would be a lot more important for Apple to keep a lid on development of the next quantum leap in its business directions (e.g., iPod, iPhone) than just price competition on a netbook or whatever.
That's how Commodore revolutionized the computer industry -- by acquiring MOS Technology and designing their chips in-house to drastically lower costs.
These chips are usually dirt cheap. I bet the radios cost more. Also, the iPhone already has significant retail price margin built in, so I doubt it would hurt them much.
Our web traffic for a free iPhone/Touch app suggestions quite the opposite. The device is already a PC in the most pockets of teenagers, it's only a matter of time really before screens get larger, and battery power is realized to its full potential.
I don't expect WSJ to suggest investment or visionary strategies, they just report the news. I could be wrong about where Apple is headed, but what makes Apple (and startups) exciting to follow from my perspective is speculation on what amazing thing they'll do next. Let's not be a negative nacy, slashdot is that way >>>
I'd say that future "iTouch" devices are going to compete more with the Kindle than the netbook market. Unless Apple has invented a magic new text input method, the lack of a touch-type keyboard makes it suck as a full laptop.
Of course, Apple could something else up their sleeve (built-in stand and wireless keyboard?) Should be interesting to find out.
It's a flat surface keyboard with no physical buttons. Besides typing on it, a key thing you can do is gestures, like dragging/expanding out 5 fingers to zoom in, pinching the middle finger and thumb to cut (cut as in cut-and-paste). The gestures are configurable. A basic configuration is switching between Windows, Linux and OS X modes, since the gestures implicitly needs to invoke Cmd/Ctrl, etc. The built-in software (no installation required) depends typos and tries to correct them to compensate for the flat typing surface.
If you use the iPhone and/or newer macbooks/macbook pros, you will recognise that some (I would say only the most basic so far) of this technology have made it there. So if they did acquire this excellent company (which sadly, cause the keyboard to be no longer available on the market, except ebay), it's reasonable to expect more usage of their technology, and its original form - keyboards and keypads. In its current form, you need quite a bit of practice to type well, but who knows how they can improve on it.
A lot of people do want a physical keypad on their smartphones: look at the Blackberry, G1, or Pre. As for an iTouch netbook, the potential utility would be greatly improved with a couple of usb ports and bluetooth for keyboard, mouse, hard drive, etc. Apple said they wouldn't make a netbook that doesn't suck, and being able to type properly would go a long way toward not sucking. </speculation>
I disagree. And when I say 'the People' I mean the overwhelming majority of consumers. They don't want a keyboard, they want a revolutionary user interface that actually suits a mobile device. The iPhone's OS is the best attempt at it so far.
A netbook is not a mobile device. Its the wrong model.
I won't make any predictions about whether Apple will still be a dominant player in the cellphone market 10 years from now. However, I will say that this move almost surely guarantees they will still be in the game by then. Other companies that rely on the same logistics and supply chain that the shanzhai guys do probably won't be as lucky unless they change their strategy as well.
UPDATE: The reading I've been doing was on my iPhone and I didn't bookmark everything. But one article was definitely this one: http://www.nytimes.com/2009/04/28/technology/28cell.html