Apple advert warns PC makers of need to innovate

Steve Jobs did the talking at Macworld this week, but it was Paul Otellini that many people heard.

Steve Jobs did the talking at Macworld this week, but it was Paul Otellini that many people heard.

Jobs, the iconic chief executive of Apple Computer, was rolling out his company's first computers powered by chips made by Intel, headed by Otellini.

But as Jobs extolled the performance of Apple's new Intel-powered desktops and laptops, many analysts watching the presentation at the annual Macworld Conference and Exhibition interpreted the partnership as a subtle warning to Intel's traditional PC partners that they need to innovate more.

A television commercial promoting the new iMacs and MacBook Pro claims that Intel processors have been "freed" from being "trapped inside PCs - dull little boxes performing dull little tasks".

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The message should be a "kick in the pants" to Dell, Hewlett-Packard and other PC makers that use Intel chips, said Tim Bajarin, president of the Silicon Valley consultancy Creative Strategies. "I think Intel is trying to spur their existing PC customers to be more creative," he said.

In recent years, Intel has aggressively developed and marketed chips to handle audio and video more efficiently. Like many technology companies, Intel wants to expand its influence to the living room and control how people watch TV, listen to music and share photos.

The problem is that computer makers - and most consumer electronics companies - have had little success convincing customers that their vision of a totally connected home is worth the time, money and hassle.

Apple, on the other hand, is known for developing software that allows users to easily make slick slideshows and home movies, said Roger Kay, president of research firm Endpoint Technologies. Although Apple has just over 4 per cent of the US computer market, its sales are growing fast with the help of its iPod music players.

"If you're Intel and you're trying to get the industry to do more digital media, what better product could you have than Apple?" Kay said. "Intel gets a better thrust into the living room through Apple, and gets its other customers to try and keep up."

The commercial was produced by Apple and did not require Intel's approval, said Deborah Conrad, an Intel vice-president of sales and marketing who is in charge of the chip maker's Apple business.

"It's tongue-in-cheek, it's a cool ad," Conrad said. "It doesn't mean that we agree that all our customers are making boring little boxes."

Apple's new computers use Intel's new Core Duo processor, which have two computing engines on a single microprocessor and are up to five times faster than the machines they replace. "These things are screamers," Jobs said.

Apple did not incorporate any of the functions Intel unveiled last week as part of its "Viiv" package of applications, such as the ability to access television and movie content online with a number of network, studio and other partners.

Viiv PCs are designed to boost the market for multimedia computers using Microsoft's Windows operating system.

"The Viiv strategy is much more important to Intel growing new business than it is to Apple," said Nathan Brookwood, principal analyst of the semiconductor consultancy, Insight64.

Apple said last year that it would replace IBM as its primary chip supplier and that its first computer with an Intel processor would arrive by June of this year.

The early unveilings, combined with the announcement that Apple earned record revenue of $5.7 billion (€4.7 billion) last quarter, helped lift its shares.

Jobs also announced a $49 iPod remote control that serves as an FM radio receiver. - (LA Times service)