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Apple Puts Intel Inside

The move to Intel chips is months ahead of schedule.

Updated from 2:22 p.m. EST

SAN FRANCISCO -- As has been rumored for months,

Apple Computer

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is starting its transition to


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chips early, CEO Steve Jobs announced Tuesday at the company's MacWorld conference here.

While the Mac faithful cheered the development, it remains to be seen whether Wall Street will be similarly joyful as the event euphoria fades. Contrary to other rumors, Jobs didn't introduce any all-new products or update the company's iPod line.

Of course, investors already had plenty to be happy about on Tuesday: Apple said it posted $5.7 billion in sales in the holiday period and sold a whopping 14 million iPods in the period. That's a far higher iPod tally than many analysts were expecting and dwarfs the 4.5 million the company sold in the holiday period last year. Analysts polled by Thomson First Call, meanwhile, were expecting the company to post sales of $5.04 billion in the period.

Shares of Apple were recently up $4.38, or 5.8%, to $80.43; earlier in the session, shares set a new 52-week intraday high at $81.89.

The computers getting the Intel treatment are the company's iMac line of consumer desktops and its professional line of notebook computers, formerly the PowerBook, which has been rebranded as the MacBook Pro. While the new Intel-based iMacs are available immediately, the MacBooks won't be available until next month.

The new Intel-based systems come some five months before Apple had promised. Jobs announced last summer that by June of this year the company would introduce Macintosh computers with Intel chips instead of PowerPC processors, which have powered Apple machines for more than 10 years.

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"We started our partnership

with Intel a year ago. The teams worked hard to make this happen in record time," Jobs said, while joined on stage by Intel CEO Paul Otellini, dressed in one of his company's famous chipmaking bunny suits.

And while Jobs had no all-new products to announce, he indicated that this was only the start. The company plans to upgrade its entire Macintosh line by the end of this year.

In terms of product announcements, the surprise was not so much that Apple is moving to Intel early as it was which products are the first to make the transition -- and what Jobs seemed to leave out. The company just updated its iMac line last fall; basically, the only change Apple made to those computers is the chips underneath the hood. 

Analysts widely expected Apple to update its notebook lineup early in the Intel transition, because the chips underlying its portable computers were significantly slower and older than those in its desktop computers -- and those found in competing notebooks.

But the move to update the professional line of notebooks is something of a surprise. Many analysts had expected the company to upgrade its consumer line of notebooks -- the iBook series -- first. That's because few of the professional applications most commonly used on Macs, such as video, photo and music-editing software, have been updated to run natively on the Intel processors.  

What was also something of a shock was that Apple didn't announce an update to its entry-level Mac mini. Much of the focus at the Consumer Electronics Show last week was on computing devices using Intel's new Viiv platform that allow consumers to play digital music and movies stored on their computer through their home entertainment systems.

Given Apple strengths in digital music -- and that Jobs

introduced the Mac mini at MacWorld a year ago -- the company has been widely expected to unveil its own version of the Viiv entertainment device in the form of a revamped Mac mini.   

Many analysts had also expected Apple to announce an update to its iPod shuffle, the entry-level digital music player that the company debuted at this conference last year. As such, it was the oldest iPod in Apple's lineup -- and one that was hard to come by in recent weeks.  

But Jobs announced no changes at all to the iPod lineup in his presentation. He did announce some new video content for the company's iTunes store -- clips of old "Saturday Night Live" episodes -- and announced that the company is now on a run rate to sell 1 billion songs a year in iTunes.  

The company has sold 850 million songs to date through its music store. Jobs said Apple had an 83% share of the market in December. 

Other than that, though, Jobs spent little time talking about the company's digital music efforts, which have been key to Apple's revival.  

Instead, the focus was on the revamped computers and several software updates. The company is releasing an updated version of operating system, iLife multimedia software and iWork suite, all of which are available immediately and will run natively on the new Intel-based machines.