Apple's chip shuffle upsets some customers
By Jim Davis
Staff Writer, CNET News.com
October 14, 1999, 2:05 p.m. PT
URL: news.cnet.com
update Apple's earnings report yesterday is sparking a schizophrenic reaction today, with thumbs up from Wall Street and thumbs down from many customers angry about what amounts to a price increase on some Mac computers.
The good news for Apple was that the company managed to beat lowered analysts' estimates, posting earnings from operations of 51 cents per share.
What really cheered Wall Street, though, were Apple's moves to make sure the company can reduce a $700 million backlog in orders. The company said it will resolve a delay surrounding new versions of its Power Mac G4 systems by using processors that are slightly slower than originally planned. The 500-MHz system, for example, now will contain a 450-MHz chip, but sell at the same price.
The company only shipped 64,000 G4 systems during the quarter, less than half the number Apple had predicted, because of Motorola's inability to make enough of the fast versions of the processor. Apple also is enduring a shortage of iBook notebooks.
A number of financial analysts reiterated their optimistic view that Apple will be able to fulfill demand in the next quarter. As a result, Apple's stock has shot up seven points to 71.06 in afternoon trading, a gain of almost 11 percent.
Customers who already ordered G4 systems shortly after the products were first announced, however, are steamed.
Apple surprised dealers and customers alike by canceling these orders and telling consumers that new Power Mac G4 systems would come with PowerPC G4 processors running at 350, 400, and 450 MHz, rather than with chips running at 400, 450, and 500 MHz. A G4 processor running at 500 MHz will not be available until the first calendar quarter of next year.
The product revision, however, did not come with a price cut. A customer that previously ordered a 450-MHz system for $2,499 would have to reorder a 450-MHz system and pay $350 more. Conversely, he can get a 400-MHz system, but at the price Apple originally planned to charge for the 450-MHz box.
During a conference call yesterday, Fred Anderson, Apple's chief financial officer, said Apple wasn't going to make more money because of the change. He told financial analysts: "We're not getting a windfall here because of the big increase in memory prices." (See related story.) Apple could not be reached for comment today.
Apple has initially told customers who bought from the Apple online store that their orders had been canceled; resellers too, have started calling customers to tell them of the changes in their orders.
Apple's stance is of little consolation to customers.
"If they had to reduce the speed for the whole line then at least they could have made a symbolic $100.00 reduction per unit. Whatever it [would have taken] out of the margin now is nothing to what it's taking out Apple's goodwill for some time to come," said one customer in an email to CNET News.com.
"Certainly it's not ethical to force backordered customers to reorder at a higher price and then go to the end of the line on the waiting list," said another on one Web site.
One reseller was a bit more circumspect in his response to the issue.
"Once customers get over their gut reaction, it boils down to whether they want the machine now or if they want a machine that's 50 MHz faster four months from now. Four months from now, there's always going to be a faster machine in this industry," the reseller said.
Apple aims to ease crunch
According to Apple, the whole problem started when it learned Motorola would be unable to ship enough of the 450- and 500-MHz chips used in Apple systems.
The company decided the only way to rectify the situation was to make sure that they had another chip supplier. Yesterday, Apple said IBM would join Motorola in supplying G4 chips.
Motorola declined to comment beyond what it said yesterday in a statement: "We are disappointed that we have not been able to meet all of Apple's demands to date and are working diligently to rapidly remedy the shortfall.
"We view IBM's licensing of Motorola's G4 processor for sale to Apple in the first half of next year as further endorsement of Apple's long-term strategic direction as a company."
The news doesn't represent a new commitment by IBM to develop new PowerPC chips for Apple's desktop computers--Motorola is essentially outsourcing production to IBM--but the move does have significant implications for Apple.
Aside from increasing the supply of chips for desktop computers, the move could help Apple as it puts the G4 chip in PowerBook notebooks sometime late next year.
Apple needs chips designed for use in notebooks, where heat dissipation and energy consumption are key issues. Although the G4 as it is currently designed does use less energy on average than the older G3 processor, its maximum power consumption means it is not well suited for use in notebooks, according to Motorola executives.
One way to solve the problem is to make the same chip in even smaller sizes, something that analysts say IBM excels at. (See related story.) Motorola also plans on making some internal changes to the design of the G4 next year that will make it better suited for use in notebooks.
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theregister.co.uk
Posted 02/02/2000 12:10pm by Tony Smith
Motorola's 500MHz G4 yields very low indeed claim sources
Motorola continues to experience major problems producing 500MHz PowerPC 7400 (aka G4) CPUs, with yields down to as little as one per cent, according to industry sources cited by AppleInsider.
Said sources claim that the problem lies with the G4's architecture and Motorola's copper fabrication process. Regular readers may recall that it was concerns over just these issues -- and the possible effect on the scheduled introduction of the G4 -- expressed by The Register last June that prompted Motorola to contact us and expressly state that it wasn't having any difficulties with either.
Our copper process works just fine, senior semiconductor spin doctor Will Swearingen told us, and we've been using it successfully in memory products for some time now.
True, but DRAM chips and microprocessors are very different beasts and operating tolerances for the former are far rougher than they are for the latter.
In the end, the G4 did debut within Motorola's broad -- some might say, very broad -- "sometime in Q3" schedule. However, AppleInsider's sources claim that as of early December Motorola had shipped just 10,000 G4 CPUs to Apple, insufficient to allow the Mac maker to re-introduce its 500MHz PowerPC, which debuted at the end of August and was later canned before it was due to ship, thanks to both low volumes and the bug that prevented the chip from running at 500MHz or more.
Motorola sources suggest that little has changed, and that yields are as low as two or three 500MHz-rated chips per 300-processor wafer. It's worth noting that the same source suggest G4s that rate at 550MHz and even 600MHz are occasionally produced, but in insufficient volumes to ship at that speed. That at least suggests Motorola has finally quashed the 500MHz bug.
Comment from IBM Microelectronics sources suggests tends to confirm there are major problems with the current version of the G4. IBM is, of course, now ramping up G4 production following an agreement to produce the CPU for Apple. IBM always said it would be Q2 2000 before the chip entered volume production, so there seems little hope for 500MHz or faster PowerPC G4s in the immediate future.
Motorola is said to be working on the next revision of the G4, which, it's hoped, will solve the problems limiting the production of the current iteration. What's not clear at this stage is whether the next release will be a modified G4 or the G4 Plus, Motorola's attempt to rebuild the G4's architecture to allow it to support clock speeds of 700MHz and up.
We suspect the latter, since the current G4 architecture, by its very nature (primarily its short processing pipeline) is never going to get much beyond 600MHz in any case, and the way things are looking right now, it can only just reach 500MHz.
Then again, the problem may simply be a hurried attempt on Motorola's part to get the chip out at all, and all that's needed is the update that all chips get some six months after launch when all the errata-no-bugs that were left in order to ship the chip on time are finally cleared out.
IBM may well be waiting for that six-month revision, which is why despite agreeing to make G4s for Apple last October, it won't actually do so until around six months after that agreement was made.
The timing seems appropriate. When the possibility of a major delay to the G4's debut was first mooted, various sources and commentators independently suggested the chip wouldn't actually ship until May 2000 -- which is pretty much when working 500MHz G4s will ship in volume
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theregister.co.uk
Posted 07/03/2000 11:44am by Tony Smith
Motorola slammed with PPC G4 supply limitation allegations
Motorola is acting like a spoiled brat by using contractual obligations to prevent IBM selling fast PowerPC 7400 (aka G4) to Apple just because it can't produce enough of them itself.
That's the claim made by "contacts throughout the Apple-IBM-Motorola PowerPC alliance", according to MacOS Rumors - though by the sounds of it 'alliance' isn't the right word at all.
The allegations centre on problems Motorola has had getting the G4 beyond 500MHz. Last year, a bug in the chip prevented it running at that clock speed, forcing Apple to withdraw its 500MHz Power Mac G4. By the end of 1999, a revision to the G4 allowed the chip to operate at 500MHz, and Motorola has been trickling processors into Apple ever since.
The key word here is 'trickling'. According to sources from within IBM and Motorola, the latter is having major problems producing sufficient numbers of the CPUs. Apple signed up IBM late last year to second-source G4s because the likelihood of that very problem.
IBM staffers claim to have identified problems with the G4 production process, but have figured out ways around them, and the company is now able to churn out not only 500MHZ G4s, but 600 and 650MHz parts in decent volumes too. And since IBM's yields are higher than Motorola's, it can charge less per chip than its rival.
Fine, but according to the sources, Motorola is severely pissed off about IBM's success and its own failure here, and is allegedly using certain clauses in its AltiVec licensing deal with IBM to limit Big Blue's ability to sell to Apple.
The irony here is that IBM's support for AltiVec is relatively recent, having been largely driven by its need to develop of a high-performance PowerPC processor for Nintendo's next-generation Dolphin games console. Certainly IBM wasn't too keen on AltiVec before last year, having decided that the technology has little value in servers and embedded applications, which are IBM's chief markets for PowerPC chips.
IBM's decision not to back AltiVec when the technology was launched almost split the IBM-Motorola alliance apart, and as it was led to a breach that took over a year to heal. Or so we thought. Perhaps Motorola's latest actions - if the rumours are to be believed; and it's important to stress these are only rumours - show a long-held bitterness against its former busom-buddy. |
