Apple: Intel chip is set free
Stock jumps 6% as Apple CEO unveils new Intel-based computers.
By Amanda Cantrell, CNNMoney.com staff writer

SAN FRANCISCO (CNNMoney.com) - Apple CEO Steve Jobs Tuesday unveiled the first Apple computers ever to use an Intel processor and announced that by the end of the year, Apple's entire computer line will contain Intel chips.

Intel (down $0.35 to $26.12, Research) CEO Paul Otellini was also on hand to introduce the iMac desktop computer with Intel's Core Duo chip and the MacBook Pro notebook, a new product line for Apple (up $4.81 to $80.86, Research), unveiled during Jobs' keynote at the Macworld Expo in San Francisco. The iMac with the Core Duo chip ships today, while the MacBook Pro line will start shipping in February. Apple debuted its Intel-based machines six months ahead of schedule.

Apple CEO Jobs preaches to the faithful at Macworld.
Apple CEO Jobs preaches to the faithful at Macworld.

While it had been widely rumored that Apple would unveil the first Intel-based Macs today, analysts said the goal of having an Intel chip in every Mac by the end of the year is ambitious, even for Steve Jobs.

Also, the company announced Microsoft (up $0.14 to $27.00, Research) has committed to ship new versions of Office for Mac for five years, a significant vote of confidence in the Mac OS X operating system.

Mike McGuire, a research director for media at market research firm Gartner, said that Jobs & co. are "masters at sharing the excitement initially and being very cautious" about how they proceed with new plans, which he said was the case with developing Intel-based Macs.

"They more than delivered that promise, and that's a very aggressive timetable," he said. "These guys have always been known for creating cool, hip things, but what's overlooked is the tactical and operational excellence getting the developer community in line and making sure the tools are there for them" to develop new software in time to debut on new platforms.

The Intel-based iMac will be two to three times faster than earlier G5's, according to Apple, while the MacBook Pro notebook will be more than four times faster than Apple's fastest notebook before it, the PowerBook G4. The MacBook Pro also contains a built-in iSight video camera as well as FrontRow media software and a remote control to access it.

Apple initially will offer two Intel-based iMac models: one with a 17-inch monitor for $1,299 and one with a 20-inch monitor and a faster processor for $1,699. In February, it will debut the MacBook Pro, which features two processors, in two varieties -- a model with a 1.67GHz processor for $1,999, and one with a 1.83GHz processor for $2,499.

Analysts were equally impressed with Apple's software development. The company announced today the newest version of its iLife software, iLife '06, that includes a new application, iWeb, which allows users to easily build Web sites that let them share photos, digital movies, music, podcasts and more.

The software also includes upgrades to its iPhoto software, which now allows users to store up to 250,000 photos and includes a new feature, "Photocasting," that lets users build photo albums and share them with other users online. The software costs $79 but comes free on new Macs.

Michael Gartenberg, an analyst with market research firm Jupiter Media, called the software "the star of the show," saying Apple is continuing to differentiate itself from Windows by creating software that makes it very easy for users to complete complicated tasks in a simple way.

The company also rolled out a new package of .Mac services, including one-click services to allow users to publish their own blogs, photos and podcasts, for $99.95 per year.

Gartner's McGuire said now that Apple has debuted new blog-creation and Podcasting software that is an answer to existing services, it will be interesting to see how many users of those services transition to Apple's .Mac platform.

Van Baker, vice president for media who also works for Gartner Group, said he was "duly impressed" with Apple's announcements today, adding that Apple's moves reward the faithful and also enhance its revenue, since it earns more on high-end PCs than it does on other products such as iPods.

He expects the new products to boost Apple's growing share of the market for personal computers -- which currently stands at 4 percent, according to IDC, a market research firm. He thinks market-share gains will result thanks to a "halo effect" when consumers switch from PCs to Macs because they are happy with their iPod experience, and because of the appeal of Apple's retail store experience. "Going into an Apple store is not like going into an ordinary retailer - it's like going into a church," he said.

Jobs unveiled a new TV commercial to introduce the line. "The Intel chip... for years has been trapped inside PCs, performing dull little tasks when it could have been doing so much more," the ad said. "Starting today, the Intel chip will be set free and get to live life inside a Mac. Imagine the possibilities."

Strong iPod sales

The Apple CEO also announced Tuesday that the company posted $5.7 billion in revenue last quarter, in part based on strong sales of 14 million iPods in the holiday quarter alone. Speaking to the Apple faithful at Macworld, Jobs said Apple sold 32 million iPods for all of 2005, and that Apple's 135 retail stores drew 26 million visitors during the holiday quarter.

"That speaks volumes," said McGuire of Apple's iPod sales figures, noting that people had been wondering whether other competing MP3 makers were making inroads against Apple which does not seem to be the case.

The fourth-quarter iPod sales were up sharply from a year earlier, and easily topped forecasts by a number of analysts who had been expecting sales of 10 million to 11 million units in the quarter. Apple stock has been on a tear since the start of 2004, largely on the strength of the iPod and the company's digital music business.

Shares of Apple jumped nearly 6 percent in heavy trading on Nasdaq. More than 81 million shares changed hands, nearly four times the average daily volume. Meanwhile, Intel lost more than 1% and Microsoft was down a fraction.

Jobs also unveiled a new accessory for the iPod, a remote control that attaches to iPod headphones and includes an FM tuner -- a move to answer critics who complained that some competing MP3 devices have tuners, unlike the iPod. The device goes on sale today for $49.

In addition, he announced that Chrysler will seamlessly integrate the iPod into many of its Jeep, Dodge and Chrysler models for 2006. And he said there will be new content for the iTunes music store -- customers can now buy archived skits from NBC Universal's "Saturday Night Live" for $1.99 each.

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