Few software developers outside Apple have rewritten their programs to run natively on the Intel-based Macs, presumably in some cases because they expected to have until June before the new machines came to market.Although Apple is including software on the Intel-based machines that will allow them to run software designed for machines based on PowerPC, those non-native programs will likely run more slowly than they do on the old machines, analysts warn. Business users, in particular, who depend on applications such as Adobe ( ADBE) Photoshop or Microsoft ( MSFT) Word may be unwilling to move to the new Intel-based systems until those and other programs run natively on the Intel-based machines, they say. "There's kind of a wait-and-see going on
Apple Computer's ( AAPL) big move to Intel ( INTC) chips is under way and already seems to be a drag on its operations. But it will take more than that to scare off the company's long-time bulls. Sales of the company's computers slowed last quarter and could remain sluggish in the current period, Apple officials
cautioned investors and analysts last week while reporting the company's earnings. Meanwhile, Apple disappointed many enthusiasts and investors earlier in the month by failing to unveil any new products at its Macworld conference. However, Apple did revamp two computers with Intel chips, possibly indicating that the Intel transition is consuming the lion's share of the company's attention and energy. The risk, say industry analysts, is that the company will continue to see soft computer sales as it goes through the transition. Further, they say, by focusing so much on the Intel transition, the company risks losing momentum in its computer or iPod music player business -- or falling behind in new markets. "They need to focus on the transition to Intel chips, because it's a big deal ... from a technological perspective and, I'm sure, from a supply-chain perspective to make this happen," says Bob O'Donnell, an analyst with market researcher IDC. The question, he adds, is: "Can Apple maintain the momentum it's gained or do a decent job of treading water as it goes through the transition?" O'Donnell thinks Apple will do "fine" as it goes through the transition, and many investors have even higher expectations. The transition may cause some short-term troubles for the company -- although some investors hesitate to even admit that much -- but the company's long-term prospects are still bright and will likely be enhanced by the move to Intel, they say. "I don't underestimate the work that has to be done to make a successful transition," says Tony Ursillo, a buy-side analyst with Loomis Sayles & Co., whose firm is long Apple. "But I'd rather bet for Apple than against Apple."
Apple announced last June that it would be
switching the chips at the heart of its computers from the PowerPC processors manufactured by IBM ( IBM) and Freescale Semiconductor ( FSL) to ones made by Intel. Despite initial fears, the transition seemed to have little noticeable effect on Apple's computer sales or operations immediately after it was announced. But if the transition was a nonissue at first, it seems to be having more effect now, especially with the company releasing its first Intel-based machines earlier this month. Blaming a "pause" in demand, company officials said sales were flat in the holiday quarter compared with the fiscal third quarter. And they warned of soft overall sales in the current period, in part because the new Intel-based notebooks won't ship till next month. And then there was Macworld. Prior to the show, rumors abounded about the exciting new products the company would debut. In the end, Apple unveiled little more than the new Intel-based Macs, which some analysts attribute to just how difficult the transition is for the company. "Not too many companies have as ambitious a product schedule as Apple does. To think they can maintain that kind of rollout through this whole year through the Intel rollout may be expecting too much," says Stephen Baker, an analyst with researcher NPD Group. An Apple representative declined to comment on the Intel transition beyond what the company said on its earnings call. In terms of the transition's effect on sales, the timing of the new Intel-based releases is crucial, says IDC's O'Donnell. Consumer notebooks are the fastest-growing segment of the PC industry, and Apple may miss out on sales the longer it waits to update the iBook, its entry in that space, he says. The timing of the new iBook release and its price are "going to have a huge impact," he says. But the early release of the Intel-based machines may also weigh on sales.