by - March 14th, 2005
With all the success that Apple has enjoyed in the last year, one would think that the only additions we could make to the Apple Death Knell Counter would be mined treasures from the mid-90s. Doing so, however, would be to underestimate Rob Enderle's willingness to look like an idiot, because today I bring you Apple Death Knell #45, in which Rob Enderle once again predicts that Apple will either dump the PowerPC processor, or exit the Mac business within five years.
The newest threat to Apple's computer business is the twin demon of Xbox 2, the soon to be released successor to Microsoft's Xbox gaming platform, and the Cell processor, IBM's next generation of processor based on its Power technology. While many would see advances in processor technology from IBM as a good thing for the future of the Mac, Mr. Enderle instead sees the demons waiting to pounce.
While he never makes it clear how Xbox 2 is a threat to the Mac, Mr. Enderle's supposition is that the Cell processor will be so good that Apple will be forced to dump Power PC. He makes the argument that IBM will focus all its efforts on the Cell, both in terms processor R&D and its own products, leaving Apple as the only user of the G5 processor.
Of course, this ignores the fact that the Xbox 2 itself uses the G5, but Mr. Enderle has never been one to let facts get in the way of his own arguments.
Nonetheless, he postulates that when Apple finds itself alone (with Microsoft) in the PowerPC universe, the company will have all of three choices on where to go with its Mac business.
"One," he wrote, "is to exit the computer business and concentrate on the more powerful accessories market, focusing on competing with Logitech and Creative Labs rather than with Microsoft. A second option will be to adopt the Cell architecture, but this would signal the obsolescence of the current generation of products and make it more difficult to hold customers. (Remember that the move to OS X cost them better than three quarters of the market they had before the migration.) Three is to move to x86, and rumors are once again flying that this choice is being discussed. Such a move, however, would have a dramatic and likely negative initial impact on the installed base."
These arguments are silly, and that's being polite.
Option 1: Rob Enderle has been saying Apple will be exiting the PC business for years. Instead, Apple has increased Mac R&D, and put enormous resources into making Mac OS X the most advanced OS on the planet. In the last few quarters, the company has even (finally) to grow market share, and this quarter could be a big one for the company's Mac division.
Option 2: If Apple chose to move to the Cell processor, it would likely manage the transition as smoothly as it has transitioned to every processor since the original 68k processor of the original Mac. Each of those transitions has gone remarkably well, and Apple has a good track record of using emulation to make legacy apps work well.
Also, while Apple lost Mac market share, it wasn't because of the move to OS X, and that is one of the worst red herrings Mr. Enderle has thrown out yet.
Option 3: Mr. Enderle has also said for years now that Apple would move to Intel. I have deconstructed those arguments repeatedly, and won't bother to do so again, but I will simply point out that he hasn't yet been right, and he's just as wrong this time.
He goes on to expound on these three choices, and concludes with: "The consensus appears to be that within the next five years Apple will either move to a new processor or exit the PC business. That will not be a fun choice, but at least Steve Jobs will be able to play really cool Xbox games to take his mind off of it."
Mr. Enderle cleverly uses "consensus" to imply that there is a vast army of industry watchers who knows the Mac is doomed. He doesn't cite one of these watchers, and every Wall Street analyst we know tracking Apple is talking about the iPod Halo Effect growing Mac sales, so you can guess what I think of his "consensus."
In the meanwhile, this makes Apple Death Knell number six for Mr. Enderle.