Sexy Jihad

There’s a great opinion piece on Ars Technica which reveals why Apple is switching to Intel:

I’ve worked with Apple
Authored by: overshoot on Sunday, June 12 2005 @ 08:56 PM EDT

and I can tell you, there’s a very good chance that they outsmarted themselves into a “no bid” response from IBM.

Part of Apple’s longstanding complaint against IBM was that Apple would announce a new computer with a new IBM processor, sales would skyrocket, and IBM wouldn’t have adequate supply. We’ve all heard the story. Here’s my take:

Apple negitiate for a new processor chip. Being Apple, they want “most favored customer” treatment, with fab-fill margins for the vendor. What’s more, they want this for what amounts to a custom processor chip, so any oversupply will just sit on the shelf until Apple decides they want them, and sometimes Apple will let them sit a while to see if they can get a price break — it always pays to remind the world that one is, after all, the Steve Jobs.

With terms like that, custom chip vendors only start as many lots as the customer contracts to accept right off the line. Apple, not exactly rolling in cash, isn’t going to highball that estimate. In fact, they play it conservative and only order a small startup batch. The rest follows, of course: the product sells, Apple orders more to cover the demand, and IBM tells them that processors have a 6-month lead time.

Apple complains publicly about IBM (does this sound like anyone we know?) IBM, being grown-ups, doesn’t say anything that might be perceived as negative about a customer.

Lather, rinse, repeat.

Well, time goes by and IBM has other customers who actually pay up front for custom designs and who don’t insist on having IBM tailor their product roadmap around a few million units a year. Apple again demands that IBM dedicate their CPU design teams to making an Apple special that will never generate much revenue. If IBM won’t play, Apple will go to Intel.

IBM does a Rhett Butler, and the rest is history. Note that you aren’t hearing one way or the other from IBM on this story.

Class bunch, IBM.

This is a must read to everyone who every pondered this question.

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