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November 3rd, 1999

[Editorial] Apple's Upcoming Acquisition Of Chip Maker Could Hint At Future Products
by Bryan Chaffin

C-Net is reporting that Apple is about to close a deal to acquire integrated graphics chip maker Raycer, Inc. Raycer, Inc. is a firm competing in the high-end 3D chip market, though the company has yet to ship any products. According to C-NET:

Apple Computer is in the final stages of acquiring all or part of Raycer Graphics, a graphics chip designer, in an apparent bid to strengthen the 3D capabilities of Apple computers, sources said.

The motive behind the acquisition in not completely clear, said observers, but the purchase could be part of a plan on Apple's part to bring "integrated" processors and chipsets to the Mac platform. Integrated processors or chipsets fuse the graphics chip into other basic silicon. Integrated chips don't deliver the same performance as separate chips, but they are cheaper.

Another motive for the acquisition likely lies in obtaining the patent portfolio and design team at Raycer, said Jon Peddie, principal analyst with Jon Peddie Associates, a Tiburon, California-based consultancy. One person that could come to Apple is Jerome Duluk, Raycer's chief technology officer and the designer of many of the company's patents.

Further, if Apple wanted to get into the integrated chipset or processor market, it conceivably would be easier to license technology or codevelop products with its graphics partner ATI Technologies. Apple currently gets most of its 3D graphics chips from this Canadian company, which is the lead supplier in the PC market. Along with making standalone graphics chips, ATI has launched into the market for integrated chipsets.

Peddie concurred to a certain degree. Apple could use the intellectual property to create a high-end integrated chipset or even come out with router technology. However, the likelihood of seeing a chipset appears to be slim.

"Apple's appeal is the design team, whose leader has direct experience with MIPS and IBM PowerPC processors," he said. "If the product doesn't see the light of day it will make the acquisition price the highest headhunting fee ever paid."

This is an informative article that contains much more information than we included in our quote and we recommend you read it.

It is doubtful that Apple has any intention of using their own 3D integrated chips that could come out of this acquisition. What is likely is that Raycer, it's chief technologist, and its patent portfolio will figure into a future Apple product. This could include a set-top game console, though my personal favorite would the fabled Apple handheld.

Initial rumors about a handheld centered around Apple co-branding a Palm unit with 3-COM. This was all but confirmed when Mr. Jobs stated in an interview that he had asked 3-COM to sell him the Palm Computing company almost two years ago. I personally believe that this was in fact the plan at one time, though my evidence is not confirmable. If that was still the plan at Apple, that product could have hit the market long ago. After all, it's a co-branding effort, not a major new product. With Palm Computing of 3-COM already possesing the technology, all Apple needs to do is give them the color specs and a few million logos to slap on the cases.

If, on the other hand, Apple has decided that developing their own new handheld product was the better way to go, then having the best screen in the handheld market would almost definitely be included in the game plan. Apple's has put a lot of emphasis on having good displays in their products since the return of Mr. Jobs. The assets of Raycer would fit perfectly as part of this plan. A handheld device that ran some version of the Mac OS, or Mac OS X Client, would be beyond fantastic for Apple's product line. Make it connectable to a Windows machine, and it will sell a bagillion units.

This is utter speculation on my part, but I think it is a sound analysis. If any company on the planet could take handheld computers off into an entirely new direction, it would certainly be Apple.


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