It’s always interesting to watch individual announcements from big companies and read the tea leaves of how each development plays into some bigger agenda. This is also an area where Apple enjoys an unusual luxury; Steve Jobs is so cool and so brilliant that somehow everyone assumes there is genius behind any decision that doesn’t make complete sense to the rest of us. And so it is again this weekend, now that News.com has staked its reputation on recent rumors:

Apple Computer plans to announce Monday that it’s scrapping its partnership with IBM and switching its computers to Intel’s microprocessors, CNET News.com has learned.

Apple has used IBM’s PowerPC processors since 1994, but will begin a phased transition to Intel’s chips, sources familiar with the situation said. Apple plans to move lower-end computers such as the Mac Mini to Intel chips in mid-2006 and higher-end models such as the Power Mac in mid-2007, sources said.

Dave quickly had a podcast up, wondering aloud if Apple will squash rumors about OS X competing with Microsoft in the OS market space, or if that itself is the goal, to extend OS X to the Intel platform to grow marketshare greatly. It’ll be interesting to hear what other bloggers have to say, and I have no special knowledge of anything here, but a few thoughts really struck me this evening in seeing the News.com story and the further speculation it’s inspired…  

First, it sounds cliche and perhaps "too 20th-century" to suggest that branding and market positioning are still important, but you know, they are. Apple has painstakingly crafted a reputation that most others in the industry (including Bill Gates) would kill for, and nothing in that long and storied tradition suggests that Steve Jobs would "sell out" simply for marketshare. Would he throw away his designer-label brand to chase the unwashed masses? Seems unlikely.

Also, isn’t it common knowledge by now that OS X (like the BSDs from which it’s derived) thrives on the strength afforded an OS with limited device support? Windows is a disaster of assorted drivers cobbled together into one big mess, and no matter how pretty the OS X interface might be, it’ll quickly squander its geek-chic arthouse appeal if it follows Windows down the path of kludgy instability.

So if "OS X on generic Intel hardware" is not the play, where is this all going? My take, whether the timing of this week’s rumors proves accurate, is that Apple will in fact move towards the x86 side… The big-picture play seems targeted to capture the consumer device space on one end and the high-end luxury machine market on the other, and for both of those targets, Apple is now paying an unnecessary premium for its current PowerPC line. That said, going with Intel specifically would be a big mistake— a huge opportunity lost— and here’s why…

Long story short, AMD is already the Apple of the CPU space. Their products are better, yet their market share is lower, and these days, they’re grappling with the challenge of leveraging technical excellence into commercial success. It’s deja vu all over again, to borrow the Yogi Berra phrase.

Consider what Apple could do with the new AMD dual-core chips in new high-end G6 or G7 lines? with quad-Opterons in the Xserve family? I’m not usually one to read CPU reviews, but there was a great Intel-AMD comparison recently that showed AMD absolutely crushing Intel— and incredibly, unlike Intel’s dual-core chips, the AMD dual-core’s use no more power than their single-core counterparts. Imagine what PowerBooks could do on this kind of power-performance point. Imagine the iPod and Mac Mini on "low-end" AMD64’s. Leverage the Mac Mini into an Apple PVR (tied into the new iTunes video store, of course), and you suddenly have a solid machine with more power than Tivo or Microsoft PVR products.

It’s disappointing, but still no surprise when a bland, boring mass-market company like Dell opts for the "safe" Intel choice; updated for the 2000s, no one ever got fired for buying Intel, it seems. But AMD already has a larger market share than Apple, and an endorsement from Apple at this critical time would further strengthen AMD’s position (and therefore, presumably capacity) in a way that would let both companies push forward with their niche strengths. AMD would continue crushing Intel in the price-performance metrics, with ever-increasing market share over time. Apple’s move to AMD would still give it most of the market share benefits of moving to Intel, though perhaps not as quickly and probably not as cheaply in the short-term. (Plus, in the short-term, it differentiates itself nicely from Dell.) That said, unless the AMD execs are asleep at the wheel, they should recognize this incredible opportunity and do everything short of giving away the company to make it happen. It’s been a tough challenge to transform AMD from the "cheap x86 knock-offs" company of the 1990s into the "geeks drooling over Opterons" shop it’s now becoming; an Apple endorsement could instantly make it the "high-end leader" over "plain vanilla" Intel in the cultural IT consciousnessness.

(Plus, at that point, AMD should sell OS X as a stand-alone product "for Apple computers," with tacit approval but not official support for geeks who choose to run it on AMD hardware with a limited choice of supported hardware devices— what they already do for the Darwin/x86 base OS. The added revenue won’t be much, but you also won’t have the added support liability or mass-market-OS driver instabilities; more importantly, you build a fanatic community and engender good will from corporate decision-maker geeks… perfect for growing your designer label in the high-end G6/Xserve space.)

[Update: Check out my follow-up, Xen & The Art of OS X Maintenance, for even more wild speculation.]

PS: Ironically, Slashdot carried the Apple-Intel story tonight with an AMD banner on the page. I’m copying it here out of sheer admiration, plain and simple. This ad was not purchased, Stanforth.org has no ads anyway, I have no interest or stock in AMD, blah blah blah.