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You're right in that the important thing here is the number of units over which the development cost is amortized. An Intel design has a lifespan of 18-months to two years. Every cycle, hundreds of millions in R&D costs are incurred developing an improved design. That's fine for Intel, because in that period, it ships 70+ million chips. For IBM and Apple, the equation was very different. The product life-cycle was the same (or at least, should have been the same, to stay competitive with Intel and AMD), and the R&D was barely cheaper (because IBM used more automated methods, which again hurt PPC's performance relative to x86), but even in its best years Apple could never move more than a few million chips of a given architecture over an 18-month period.







Member since:
2006-01-03
"IBM and Motorolla couldn't keep up with Apples demands - IBM wanted nice long cycles between pushing the clock speed up; Apple needed short bursts and rapid updates as to keep up to date with the latest Intel and AMD offerings"
Exactly right. IBM is hosed; low margin toys lik ethe XBox won't fill the hole left by AAPL's departure.