Monday, May 23, 2005

Apple Computer Inc. has always blazed its own trail, a tack that has helped turn the company into a stock-market darling lately. But a pivotal step toward the mainstream could be in the offing.

The computer maker has been in talks that could lead to a decision soon to use Intel Corp. chips in its Macintosh computer line, industry executives say, a prospect that may shake up the world of computers and software.

Two industry executives with knowledge of recent discussions between the companies said Apple will agree to use Intel chips ... Talks between Apple and Intel could founder, as they have before, or Apple could be engaging in negotiations with Intel to gain leverage over IBM.

One of the two industry executives said Apple isn't likely to market OS X for other PCs. Besides hurting its own hardware business, such a path would put Apple in more direct competition with Microsoft, whose application programs are important to the success of the Macintosh. Instead, the company is likely to package its modified software with its own Intel-based hardware, though it is not clear how the company will prevent users from shifting the software to other machines, the executive said.

Assuming that plan goes forward, consumers would need to get new versions of their application programs for Intel-based Macs. Software companies would have to convert those products, though that procedure should be relatively simple for companies familiar with OS X, former Apple engineers say. The industry executive said Mr. Jobs could announce the new strategy as early as June 6 at its world-wide developers conference in San Francisco, a place the company typically informs software and hardware partners of future directions.

Apple sells only about three million computers a year -- a small portion of the 200 million or so machines sold globally -- so a new relationship with Intel wouldn't increase that company's sales much. But Intel, which has long courted Apple, could benefit by an association with Apple and its hit iPod device, which may be luring more Windows PC users to consider Apple computer products.

In a sign of how small a player Apple remains in the PC market, the strong sales have translated into only minuscule market-share gains. Apple rose to 2.3% of new world-wide PC sales in the first three months of the year from 2% the prior quarter. Windows PCs account for the vast majority of the rest of the market.