NYT: Apple Cut IBM Ties Days Before Intel News; Targeting Living Room

Apple Computer CEO Steve Jobs told I.B.M. just days before it switched to the Intel processor that it would stop using its Power PC processor, The New York Times reported Saturday (free subscription required).

Several executives close to both companies told the newspaper that "Mr. Jobs waited until the last moment - 3 p.m. on Friday, June 4 - to inform Big Blue. Those executives said that I.B.M. had learned about Appleis negotiations with Intel from news reports and that Apple had not returned phone calls in recent weeks."

"Each side disputes what led to the breakup," the paper wrote. "People close to I.B.M. said pricing was a central issue, while Mr. Jobs insisted on stage Monday that I.B.M. had failed to meet promised performance measures."

Industry experts said Mr. Jobs is "racing quietly toward a direct challenge to Microsoft and Sony in the market for digital entertainment gear for the living room," and that Apple could compete against the two game console leaders by building a low-cost iMac mini-likei, "able to run the vast library of PC games."

The newspaper also reported Apple explored a number of other options to replace the Power PC processor from I.B.M., including Sonyis Cell chip.

"An executive close to Sony said that last year Mr. Jobs met in California with both Nobuyuki Idei, then the chairman and chief executive of the Japanese consumer electronics firm, and with Kenichi Kutaragi, the creator of the Sony PlayStation," the paper reported. "Mr. Kutaragi tried to interest Mr. Jobs in adopting the Cell chip, which is being developed by I.B.M. for use in the coming PlayStation 3, in exchange for access to certain Sony technologies. Mr. Jobs rejected the idea, telling Mr. Kutaragi that he was disappointed with the Cell design, which he believes will be even less effective than the PowerPC."