PC makers want cheaper Intel chips to compete with Apple's Air pricing - Page 2

The reason Dell can't compete is that Apple spends twice what Dell spends on R&D. Worse for Dell, they have a buttload more products to do R&D on than Apple does; Dell is the "kitchen sink" manufacturer, trying to cover every possible form factor. Apple is very focused on a select few product lines.


Yeah, but since Apple has retired the low-end MacBook line, they can cut the price on the Air if they need to without fear of cannibalizing sales.

From what I've read, it seems that Tim Cook was the missing piece that Apple needed to compete on price in the tech manufacturing world. And they're still able to maintain their profit margins. Apple won't be quick to cut their price until sales start slowing down and they aren't maximizing profit. I think the Air could still be very profitable at the $899 price point.

Apple is willing to compete on price when it makes sense. As evidence, I would point to the $50 iPhone 3GS.

It's not trash, it's just a perfect storm. Intel desperately wants these companies to make nicer Intel machines before ARM arrives in laptops. These guys can't compete with Apple on price, will likely have worse margins as they usually do, and if they have to sell machines at the same price as Apple likely know they're going to get their butts handed to them. Nobody (or a very few fanatics) are going to be excited to buy a $999 Acer that has the same specs as a $999 Mac, so getting a price concession out of Intel seems like a way to at least pad margins. But, in a sweet bit of irony, there is no way Apple will sit there and let makers with smaller volumes get a better deal on chips.

Intel knows that Apple is a recompile away from being able to do a real machine on ARM, so Apple probably has that as leverage, though 3rd party apps would have the same issue as Win8-ARM (though mostly an easier time recompiling thanks to Xcode). I'd rather have an x86 laptop for the time being since I'm sure that the rendering app and CS5 won't be ported to ARM very quickly should Apple go that route.

Anyway, the whole situation is totally plausible and Intel is crapping bricks at the moment looking at ARM suddenly threaten their netbook/laptop chip market. The clone makers know that they have that as leverage - they're certainly going to try and crank out un-spectacular ARM laptops to go with Win8 when the time comes, and Intel knows it.

Its interesting that the tables are turned on overseas manufacturers. They are basically squeezed by Intel and Microsoft. This could open up doors for AMD if they have a viable mobile platform.

http://sites.amd.com/us/microsoft/wi...Windows-7.aspx
http://www.engadget.com/2011/09/14/a...-hands-on-wit/

Nice try.

Please, PLEASE check your politics at the door. This is a tech site. There are plenty of sites available if you want to talk politics.

Be an adult and take it elsewhere.

Jimmy was clever and figured out how to make a premium edition of the newspaper (whatever that might mean) using the same basic stories. Tommy works hard, he's just not as smart as Jimmy and never figured out how to be innovative and increase his margins, so he doesn't earn as much. Realistically, he never will be. He's not looking for a handout, but as the newspaper company sees some terrifying competition coming up, it would rather have both Jimmy and Tommy sell premium papers. The newspaper offers Tommy a premium design for the paper he sells, and Tommy is smart enough to realize that HIS customers might not be willing to pay the higher price AND that the newspaper company wants this so badly that he might be able to get a better price on the paper from them.

Newspapers aren't a good analogy, but that's closer than essentially 'Tommy just complains too much and won't work to buy a new skateboard.', which really is completely disconnected from what is going on in the market. Trying to connect this to a political position is just a hell of a stretch.

Most likely, people, myself included don't care about it HERE. Take it somewhere else.

Macs are historically more expensive than PCs so it is strange to hear PC makers say they can't match the Mac on price.

This will not help them. Because if intel lowers price then they will have to extend that to Apple as well. You cant charge all but one company a price. So if apple gets it cheaper then they can lower the price of the air and still keep the same profit margin on the product.

Perhaps. Perhaps it is semantics. Two people go to buy a car. One person says "Please lower the $17k price by $2k so I can afford to buy the car. I only have $15k and I really need this car."

The other says "If you sell this car to me for $15k, I'll buy it. Otherwise, I'll go the the dealership next door."

No difference in results, but the perceptions are wildly different. One seems to be bargaining from a position of strength, the other weakness. Which on is more likely to get the desired result?

Depends on the dealer. What's his position? Currently, Intel, with respect to the PC guys is stronger.

As someone who has watched the Apple saga for a long time, the current state of affairs is astounding.

For so long all we heard about was the Apple tax, and how Apple only made overpriced machines for people that valued bling over substance, and that Apple's products were all show and no go, etc. etc.

Meanwhile, the PC industry continued the fabled "race to the bottom", shaving nickels off their BOM and cheapening their wares to the point of disposability. That 18 month old PC staring to get a little flaky or slow? Go to Walmart and buy a new one for $350 including monitor!

Apple, obviously, had no chance to compete in that kind of market, and was going to wall itself off in its golden ghetto of pompous aesthetes and foppish posers. Even when they could get into a new market and briefly achieve price parity, the inevitable drive to cheap commodity hardware would shortly leave them once again high and dry.

And here we are. PC sales are flattening, PC manufacturers are making no to little money, consolidations are underway, and markets are shifting to reward quality and portability.

And abruptly, Apple is sitting pretty. They've been steadily investing in manufacturing processes that allow them to offer very high quality for the least possible money, amassing a war chest that allows them to lock up supply chains, investing in anything that allows them to make their products lighter, thinner, more rigid, with better battery life and good performance.

The PC guys have not. They know how to try and get parts for cheap, and put them in boxes that occasionally are tricked out with a little style, when the mood strikes, but such gestures generally go nowhere and are summarily dropped.

And now they're kind of screwed. Sure, they will continue to sell far more cheap, heavy, kind of crappy notebooks than Apple ever could. But they're not making any money off of them, and those chickens are starting to come home to roost. They start looking around for the kind of design that might actually coax their customers to spend a few more bucks and guess what? There's Apple, with all their ducks in a row, and having left little room for anyone else to play in their space. That fancy pants ghetto suddenly doesn't look so silly, does it?

Yeah, it's frankly amazing to see what state the PC industry is in after all these years. From the very first piece of Apple hardware I've ever bought (a G4 powerbook) I've heard nothing but "overpriced toy", "too expensive", "hyped up fashion item" and similar remarks from people that were still living in the PC world. Look at where we are now. Except for a few manufacturers, the Acers, Dells, Asuses, Packard Bells and all the other shovelware PC makers have not been able to come up with anything besides increasing volume and lowering margins. Now that more and more consumers are kind of fed up with craptastic, generic plastic computers they already hate and want to replace within a year, they are completely clueless as to what happened and how they should adapt to remain relevant.

But there is no car dealership Next door.

I would say the first part of your analogy is correct, but the second transaction looks more like "I will buy 1000 of these cars for my rental fleet if you take 15% off the total price. Moreover, I will commit to buying 10,000 of these cars over the next two years for my hugely successful chain of highly cost efficient rental locations for a fixed price I will negotiate now that may or may not reflect pricing changes that are advantageous to me."

Then, the car manufacturer sees that the rental business as operated by customer B is likely to be a source of lucrative sales, and, hoping to get more players involved, publishes a business plan for just such a highly efficient rental franchise. Then, customer A declares that they can't possibly offer car rentals at competitive prices and take advantage of this franchise scheme unless the car manufacturer offers them big discounts, despite the fact that they can't commit to any particular purchase volumes, now or in the future.

Good post! Something definitely went wrong along the way.

Ugh! When will PC makers realize, "It's not the chips...."

The problem is that the clone makers never really competed with Apple - they competed with IBM, who had uninspiring beige boxes at a higher price. As the whole PC industry (non-Apple) commoditized, IBM sold their business to Lenovo and nobody has a margin left. They never had to actually design a product and don't know how to. HP maybe could have, but just gave up.

Intel is suddenly very afraid of ARM, and Microsoft is being killed by Android on the phone side and has to worry about only having their OS on pieces of junk on the PC side. There's no value in the clone business, potentially marginalized value in the clone OS business... It's a thing of beauty.

Honest question:

As I understand it state of the art Intel chips cost around $100-$120 in quantity.

State of the art ARM chips cost $20-$25 in quantity.

Aside, for now, the differences in architecture, 64-bit, etc... Is an intel chip worth 5-6 times an ARM chip?

Why?

Could a 4-ARM motherboard (8 cores, 8 GPUs) compete with a Intel i7 (8 cores and 1 GPU)?

Will the equation change dramatically when ARM goes 64-bit?

Yep, nice summary. 'Something definitely went wrong along the way' is Apple's 'something definitely went right along the way.' They've always been about making better products instead of just cheaper ones, and clearly that was the right call.

Come on Jackons, you're screwing up the grading curve for the whole class. In this analogy the car dealership next door is arm chips.

Personally, I like to give people the benefit of the doubt. I assume that you would be referring to Iraq and Afganistan by saying "illegitimate wars"? Saddam provided plenty of concern over WMDs going so far as to even gas his own people. Bush made the call to resolve that potential crisis before it got that far and some of the intelligence was suspect and apparently wrong. I give him the benefit of the doubt on going in there to stabilize a regime that appeared to have access to some seriously bad stuff. Similarly I don't fault him for going into Afganistan to get Bin Laden and his cronies. The Taliban was harboring him and so they were a perfectly legitimate target as far as I'm concerned.

I'll also give Obama the benefit of the doubt and assume that he does indeed love this country and is doing what he thinks is best for the country. The fact that he seems completely misguided in how he is trying to accomplish this is obviously a topic of much debate.


I completely agree with what you have here. My guess is that Intel developed the design spec to ensure a ready market for their product in the event that Apple takes the Air to their own A series processors. This makes sense for Apple, so it likewise makes sense for Intel to try and support a healthy alternative to the Air.

You're grossly underestimating the complexity of what Apple has achieved. It was many years in the making and isn't likely to be matched just because someone at Dell or whatever decides to go all in.

Apple is literally subsidizing new production capacity in exchange for exclusivity for some set time period. Apple has endlessly iterated and refined the design of their products, shaving fractions of an ounce and millimeters by tweaking battery chemistry or taking the lead in things like unibody construction or sealed batts. They've identified technologies that support their vision and locked up the supply chain.

Most importantly, they've had their eye on the ball all this time. Thin, light, great battery life, excellent construction, great user experience. It's all they do.

Where are razor thin margin operating on a shoestring and a prayer PC assemblers going to get the cash to change up their entire business plan? Because that's what's needed, not just someone to greenlight dropping the optical drive. They have to invest in manufacturing and supply chains, invest in basic material R&D, invest in processes, and somehow coordinate all that so it doesn't cost more than Apple-- even though all they know how to do is try to get commodity parts assembled as cheaply as possible. No wonder they're crying to Intel.

There is one massive difference between the way Apple does business with Intel and the way every other PC manufacturer does. That is Intel Inside. You never see badly aligned stickers on Apple boxes, or ads chiming away or any reference to Intel. Apple can I am sure do deals that say we don't need your marketing dollars let's have your bottom price based on very large volumes on a small number of products. On the flip side Intel marketing wants Intel to be the deciding factor for customers where the OEM cares for the marketing dollars so this is a reason why Intel might use marketing dollars to subsidise price, therefore keeping the lowest price clauses intact.

Intel currently supplies the CPUs used in Apple's MacBook Airs. How then, prey tell, can the author assert that Intel's CPU pricing disadvantages Apple's competitors? Such a claim makes no sense.

The author isn't asserting that, he's reporting that PC manufacturers are admitting that they can't compete with Apple head to head in the form factor that Intel would like them to, so they need special consideration from Intel.

Basically "You want us to build MacBook Air clones for under $1000? We can't do it unless you make us a deal." That doesn't have anything to do with what Apple pays for Intel chips but rather what Apple pays for everything else.

Let's put it this way, "One man's grovel is another's hard bargaining."

Ironically, they'd have more success against Apple if they asked Intel to increase the chip prices for everyone! Assuming everything else stayed the same, the percentage price difference between Apple and the rest would be less if they all paid higher prices for the chips.

As for lowering the price...sure, it would allow Apple to also lower the price...but would they?

Well, apparently you are wrong. It seems like Apple has out-engineered them not only in the computer design but in the business/production design as well.

There have been other reports that Apple has created such an efficient supply chain, and invested in critical part capacity, etc, that these PC clone makers literally cannot build one of these - even a cheaper version - to sell at $1000.

This is the current reality.

Great set of questions. Another aspect of this is going to be how Windows adapts to this new architecture. If developers are going to have to start coding for a second platform, which is more potentially profitable for them, a large and growing installed base of Mac users OR a new Windows platform that they might be more familiar with and involve fewer "growing pains"? My hope is that this might play in the direction of Apple and lead to more developers taking advantage of the ever growing Mac user base.

One way to look at it (and I'm certainly not the first to make this observation) is that Apple has designed their entire operation with exactly as much care as they design their devices. Constantly looking at every piece and process to see where they can improve quality and efficiency, eliminate unnecessary legacy bits, spend some capital to advance the state of the art, etc.

It didn't happen overnight and it won't be matched by enlisting a few aluminum milling machines.

I would say yes: a midrange to high-end Intel chip could be considered worth 4-8 times compared to a midrange to high-end ARM chip, and no: a 4-ARM motherboard (8 cores) would not compare favourably even to a quad-core i7 setup. 64-bit is completely irrelevant to performance, but ARM will have to go there anyway to be able to support systems with 4GB+ of memory.

As much as I like ARM chips and the clean architectural design they are built on, they are simply no match to your typical desktop x86 chip. Not even nearly. Trying to make up for this by putting multiple ARM CPU's on the same motherboard does not help a lot, because many tasks don't scale very well using parallel execution. It would also kind of defeat the purpose of using ARM in the first place, as 4 dual core ARM CPU's in a single system would use more power than an Intel CPU anyway.

Anyway, the question you should ask yourself is not whether ARM chips can rival Intel chips in performance, but whether they even have to, to be successful: we've reached a level of computational capabilities sufficient for nearly everything the typical user needs long ago. For many use-cases, a fast dual or quad-core ARM CPU would be more than fast enough.

Take the Intel Atom for example: compared to current dual-core Cortex-A9 ARM chips, it offers about the same level of performance, at somewhat higher power consumption. Many netbooks and low-end PC's have been sold running Atoms, and everyone has accepted them as 'fast enough', mainly because of the brilliant marketing Intel pulled off, selling years-old, repackaged technology as if it were something new, slapping a fancy, modern-sounding name onto it. Sure you are not going to do any gaming on an Atom, or transcode videos, but for basic home/office use, browsing the web, that kind of stuff, it's more than sufficient. That said, compared to a Sandy Bridge i3/i5/i7 or even to a 5-year old Core 2 Duo, the performance you get from an Atom is abysmal, laughable even.

Personally I don't think ARM will ever rival Intel/AMD for serious computing, but I can see ARM chips ending up in low-end/cheap computers and laptops in the future. If Intel is worried about anything, it is not worried about losing their lead in high-end or even mid-range, but about losing the low-end, and not succeeding in gaining a share of the mobile market.

Like others have said, yes, in a way they do. They tell their component suppliers that we want the finest you can make and the best price you can do it for and we will pay for everything in advance. We will also pay or finance any expenditures that you may need to get the level of quality and quantity we need. And, you won't have to worry about making items that will be stockpiling in your warehouse because we discontiued our item 6 weeks after we introduce it.

Which, to put it in the context of the original exchange, is vastly different from telling a supplier "We need a price break because we can't compete with that other guy."

You're both wrong. I've been involved with a good bit of machining, including machining for aerospace parts for the last decade or so. I could find 50 shops within a 20 mile radius that can easily make cases like this. And the material is just aluminum plates - which are once again very readily available.

And there's no way that Apple has monopolized the production capacity for milled aluminum parts. Just do a search for 'milled aluminum' to get an idea of how many different products are made of milled aluminum. Apple's specs don't appear to be anything special compared to aerospace or automotive or hydraulic components.

AND, if they're not clever enough to find any of the thousands of places that can do this type of work, there's no reason they couldn't make them out of stamped metal, plastic, or walnut, if they wish.


Really? All the AMD fans here like to brag about how much better AMD chips are than Intel chips for low power usage. Why can't the PC makers buy AMD chips - which are much less expensive than Intel?

That's all absolutely true. ARM isn't even in the same league.

HOWEVER, there's no reason that these vendors couldn't use AMD chips. All the AMD fans here love to brag about how much better and more power-efficient their chips are.

That comment would be getting dangerously close to evidence of collusion -- all that would be needed to prove monopolistic behavior.

LIke others have stated its not in the chip prices though. The other manufacturers have to understand that its in the other parts like the design process and the manufacturing. IF Apple can ake an air at $1000 with say intel chips at $100 each then other manufacturers should be able to do it also.

Intel should really stop caving to the other manufacturers.

I want to discuss your answers further -- you appear to have hardware expertise that I lack. I don't want to challenge your statements, rather to understand how they affect the computing world as I see it. My questions are interspersed.


I realize that 64-bit has little or no effect on hardware performance. But it can have a significant effect on OS and app performance (paging memory, video rendering, parallel operation, etc.). Based on the work being done by the user, 64-bit and additional RAM can affect the perceived power and speed of the "hardware".



I think I knew the answer to that, before I asked it.

However, Apple has done a lot of work to make their OS(es) and apps (including apps by 3rd-party developers):
-- largely independent/abstracted from the underlying hardware
-- to use OpenCL and GCD wherever possible
-- to exploit parallelism using any available CPU and GPU cores
-- for lack of a better phrase distributed processing

If Apple has done its job well, I believe that a power computing solution, for the near future, would be a series of "compute boxes" daisy chained on a thunderbolt cable along with RAID Storage, peripheral docks, wireless stations, and Displays.

These "compute boxes" would consist of:
-- enough SSD to run a minimal OS
-- RAM
-- CPUs and GPUs
-- an internal power supply
-- a fan if needed
-- small packaging like the Mac Mini or AppleTV 2

The theory is that as your compute needs grow -- just add another "compute box" to the daisy chain

These "compute boxes" could contain whatever CPU and GPU architecture that provided the required price/performance.


Yes, I believe that the iPad supports that conclusion.


The only problem I have with your last paragraph -- is that for ARM chips to be used in low-end, cheap computers and laptops.

As I understand Windows 8, in order to run legacy x86 apps the device will require an x86 CPU. This would appear to eliminate the use of ARM in low-end, cheap computers and laptops.

Further, developers might be discouraged from rewriting their x86 apps for Metro/ARM because of the disincentive of paying MS 30% for the privilege.

I have no problem with the curated Metro store or the 30%...

But I think it is a chicken/egg thing -- without a lot of Metro apps there won't be any Metro tablets (and low-end, cheap computers and laptops) -- and without the Metro tablets et al, there won't be any incentive to port x86 apps to Metro/ARM.


Finally, I don't know this, but based on past performance, I suspect it is true:

Say there is a breakthrough and a new computer architecture suddenly arrives on the scene. Apple is in a good position to migrate their OSes and apps, natively, to exploit that new platform. And through something like rosetta, existing iOS, OS X and Windows apps could run at normal speed in emulation. Third-party iOS and OS X could run native with a simple recompile.

Apple has bet the farm (and won) on this kind of revolutionary migration -- no other OS or hardware mfgr has.

For example the idea that case production is tied up by Apple. Some of the equipment could very well be owned by Apple but it doesn't matter, CNC factories can be set up in matter of weeks. That is if you need to setup a factory at all. There are plenty of job shops to take on that work.

In the end this appears to be an issue of people not wanting to own the infrastructure and the risk that goes with it. In effect they are looking for Intel to make the machines risk free.