Friday, May 9, 2008

Why did Apple buy a chip company?

Ok, I have to get this one out there before I'm proven right or wrong and I keep thinking about the fact that I haven't written anything on this topic, so let's get it "off my chest" now.
There has been a lot of talk about the recent purchase of the chip fabrication company, "P. A. Semi". Various people have made predictions that Apple is interested in making their own chips instead of purchasing from Intel. There are other wild predictions that Apple is interested in using the new capability in order to produce chips for future iPhones, or other future products, and thus saving money on production and bringing down prices in retail far below what competitors could accomplish. 

While all of these predictions may have some merit, they also have problems. I don't really believe that one small chip fab. company can really make Intel clones which run anywhere near as well, as fast, and as efficiently as the true Intel, or even AMD. There's a tremendous amount of knowledge of the internals of the Intel design at Intel, which makes them capable of producing "better" chips (for whatever definition of "better" happens to be their liking at the moment) and producing them a lot faster and more efficiently than any other company. AMD can pull it off these days because they, also, have a long history of producing Intel compatible chips. They didn't have that history initially, and it took them a while to come up-to-speed, but now that they have it, they're doing pretty well. Could P. A. Semi also produce thus chips? Sure, given time and probably a lot more employees and money. Would it be worth while for Apple to do this? I don't think so. Apple needs to spend their time and money on other things such as design, software, building new markets.
Similarly, I'm not really convinced that Apple would be interested in using a chip company to produce new chips for their iPhones. Maybe a smaller, specialized, chips, but not the main processor. I admit that this idea has a lot more going for it than the Intel idea, but I'm still not convinced due to the other arguments regarding investments of time and money into a business which is new to them. 

So, what
 is Apple planning to do with this new capability? Well, let's look at the big problem which Apple has had for many years now and which still plagues them today; third party hardware. Has anyone read about the latest issues with "Psystar"? Well, the problems with third party hardware actually go a long way back. A long time ago, Apple actually tried out the idea of allowing other companys to build hardware and run MacOS. It seemed "cool" for a while, but ultimately there were problems with compatibility and also simply with "look and feel". Apple likes to make sure the customer has the correct "Apple experience" with all "Apple products", or actually with any product which is perceived as running an "Apple system". Ultimately, if someone produces "crap" and runs MacOS on it, that "crap" is perceived as connected with Apple and reflects badly on them and on their other products. This only makes sense and one need look no farther than some of the "Windows crap" out there so that this is true. 

Now that Apple has released the iPhone, their problems are continuing with this new hardware. There are lots of third party iPhone applications as well as third party iPhone knockoffs being sold, mostly in East Asia countries. Apple would really like to have better control of all of this "crap" and disallow unofficial hardware and/or software from working with their products. 

I believe Apple is very interested in producing a software/hardware combination which would ultimately lock down each part of their product and put an end to the whole "third party problem" once and for all. With a chip company in-house, they will be able to ultimately produce a small "Apple chip" which can be integrated into all of their products. Their software won't run if the chip is not there and responding correctly, and perhaps the chip would monitor software running on the device and disallow access to memory or to the bus if that software doesn't respond correctly to the chip. Apple will ultimately have the complete control they desire and will be able to put an end to the "third party problem" for good. 

Could some other company reverse-engineer the "Apple chip" and produce their own fake Apple equipment? Possibly or possibly not. There are many complex cryptographic systems which could be used, with encodings which continually change with time. There are even methods of reprogramming the chip automatically with each software update. I don't think it would be too hard for Apple to stay ahead of those who would try to break the system. 

The final question, of course, is what this will do to Apple's market. Yes, it would go a long way toward guaranteeing the "Apple experience" and securing the end-user systems. However, I believe it would also alienate many "Geek" customers who like to "do more" with their equipment and "extend" the capabilities in various ways. If Apple equipment were completely locked down, I believe Apple would see their market share ultimately decrease. 

We'll have to wait and see what happens! It should be interesting!