Updated from 2:39 p.m. EDT

SAN FRANCISCO -- Apple's ( AAPL) Macintosh computers will have Intel ( INTC) inside beginning next year, CEO Steve Jobs said Monday.

Apple will introduce its first Macs using Intel Pentium processors by next June, Jobs told developers here. The company plans to complete its move from its current PowerPC-based computers to Intel-based ones by the end of 2007.

The move largely has to do with performance and power-consumption issues, Jobs said, noting that the company has been unable to deliver a notebook computer running the top-of-the-line PowerPC G5 chip to date.

"We want to be making the best computers for our customers going forward," Jobs said. "As we look ahead and envision the array of products we want to build, we don't know how we're going to build them" with PowerPC architecture.

Although reports had surfaced in recent weeks that Apple was considering the change, many in the Mac developer community seemed stunned by the move. Jobs' announcement was greeted initially with silence from the crowd here.

Intel is the dominant chipmaker for PCs, but none of the computers that Apple has made to date have run on Intel's processors. The original Macintosh and Apple II computers ran on chips from Motorola ( MOT). About 10 years ago, Apple moved to the PowerPC chip designed by Motorola and IBM ( IBM).

Apple has apparently been considering the move to Intel for some time. Apple has quietly designed every version of its OS X operating system to run on Intel chips since the first iteration of OS X five years ago.

The move to Intel chips could allow Apple to cut prices on its computers. Intel typically helps subsidize its hardware partners' marketing expenses. One of the problems Apple has faced in gaining new customers is that its machines are typically priced above comparable ones from competitors.

But the change could also bring risks for Apple: The company has steadliy lost developers and market share since its move to PowerPC processors a decade ago.

Indeed, Jobs spent a good deal of his presentation wooing developers, assuring them that Apple was doing its part to make the coming transition as painless as possible. The latest version of its coding software will allow developers to save their programs in versions for both PowerPC and Intel chips. The company also has developed emulation software that will allow PowerPC-based programs to run on its forthcoming Intel machines.

In addition, the changeover could lead to increased competition. Because the company will be offering a version of its operating system that runs on Intel-based machines, customers could conceivably install it on computers that Apple doesn't manufacture. Such sales could potentially cut into Apple's own computer sales.

Although Apple is garnering increasing revenue from its iPod music players, computer sales still accounted for 46% of overall revenue in the first half of its current fiscal year.

Apple representatives didn't immediately return calls seeking comment.

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