[Apple Shockwave]⑬ "I Should Have Chosen Intel Instead of IBM..." The Apple CEO Who Ousted Jobs Regrets It

Attempt to Break Intel with Apple-IBM-Motorola Alliance
PowerPC Failure as the Cornerstone of Jobs and Apple's Comeback
PowerPC and Apple Silicon, Similar but Different Outcomes

Editor's Note[Apple Shockwave] is a content series that explores the upheaval caused by Apple entering the semiconductor market. You might wonder, why semiconductors from Apple? Apple is no longer just a company that makes smartphones and computers. After long efforts starting from founder Steve Jobs, Apple has designed world-class semiconductors used in mobile devices. If Intel was the giant of the PC era, Apple has become the top predator in the semiconductor ecosystem of the mobile era. Amid the global semiconductor supply chain crisis and large-scale investments in semiconductor production facilities, we will carefully examine the upheaval and prospects in the semiconductor market brought about by Apple Silicon to broaden our readers' insights. Apple Shockwave will visit readers every Saturday. After more than 40 installments, it will be published as a book.

"My biggest mistake was choosing IBM, not Intel." John Sculley, former Apple CEO

Apple Silicon has achieved success that marks a turning point in semiconductor history. The iPhone started with chips made not by Apple but by Samsung, but now it carries the A-series chips, which outperform competitors' products, leading the competition. Apple PCs are also making relentless cracks in the giant Intel through their self-designed M-series chips. So, has Apple only succeeded in semiconductors? Certainly not. Apple's past semiconductor failures are worth reflecting on for any company aiming to challenge Apple.

The unfamiliar background of the Apple and IBM alliance seen now

Apple, which started in a warehouse, could not initially procure semiconductors on its own. Like other PC makers, it used CPUs already available in the market. Steve Jobs wanted semiconductors that could fully unleash the performance of the Macintosh (Mac) computer operating system (OS) he led. However, semiconductors could not satisfy his ambitions. The semiconductors Jobs desired required high performance, but 'Moore's Law' did not allow it.

IBM introduced its first PC using Intel's 8086 CPU and Microsoft's (MS) OS, MS-DOS. Jobs, determined, chose Motorola's 68000 as the CPU for the first Mac computer he launched. At that time, Motorola's chips outperformed Intel's. The Mac, a graphical user interface (GUI) computer, operated based on Motorola's chips.

Apple relied on Motorola's chips but gradually began to fall behind in competition with Intel. IBM-compatible PCs evolved from Intel 286, 386, 486 to Pentium, and MS introduced the Windows OS, shaking the status of the Mac computer GUI created by Jobs. Both roots and pillars were shaking.

Although Motorola released the 88000 as a successor to the 68000, it struggled to catch up with Intel's rapid progress. The underperformance of the CPU was a challenge for the Mac, which was more expensive yet less powerful than Intel PCs. Naturally, Apple's performance continued to decline. Motorola, supplying chips to Apple, which held only about 10% of the PC market compared to Intel's 80%, differed greatly in research and development investment scale. In economies of scale, Motorola could not compete with Intel.

John Sculley, former Apple CEO. Photo by John Sculley on LinkedIn

John Sculley, who took over Apple's helm after pushing out Jobs, envisioned an alliance of companies humiliated by Intel and MS. IBM and Motorola. The so-called AIM alliance. Motorola was Apple's existing CPU supplier, but IBM was unexpected. IBM, which made mainframes for enterprises and chips for UNIX servers, was an unignorable presence in the semiconductor industry. Perhaps no semiconductor company had IBM's level of technology. IBM also manufactured semiconductors directly. However, IBM had no PC chips. IBM intended to develop its 'Power' architecture server chips for PCs. Rather than pushing the project alone, IBM wanted an alliance with Apple. Apple also needed IBM to reduce dependence on Motorola. Apple invited Motorola to participate, considering existing business relations.

Sculley differed from Jobs, who wanted a strictly closed ecosystem for Apple. Coming from PepsiCo, Sculley argued that Apple should join forces with IBM PCs. He believed this would generate greater sales. He promoted Mac-compatible computers not manufactured by Apple. IBM also needed a weapon to repay the humiliation received from MS and Intel. Looking back, the unfamiliar alliance between Apple and IBM was formed this way.

On October 2, 1991, Apple, IBM, and Motorola joined forces. It was a project to use IBM's Power architecture developed by Motorola as semiconductors in Apple Mac computers. From today's perspective, it was an alliance on the level of Marvel's 'Avengers.' With the support of two semiconductor companies armed with formidable technology, Apple seemed to secure a CPU with absolute performance superiority. A trench was dug to defeat the Intel camp, which had lower performance compared to MS Windows, which mimicked Mac OS, and PowerPC. IBM also released an OS called OS/2.

Apple started using PowerPC from 1994 and by 1997 used PowerPC chips in all its PCs. Apple introduced product names like Power Macintosh and PowerBook, emphasizing 'Power' to attract consumers' attention.

Apple Power Mac computer

'Can't tolerate heat' Jobs returns and abandons the CPU he did not choose

Here is something to consider. PowerPC was born when Jobs was ousted from Apple. It means it was not Jobs' will. Coincidentally, Jobs returned to Apple one year after Apple started using PowerPC in all its PCs.

Immediately after his return, Jobs abolished the Mac-compatible program promoted by Sculley. Jobs was not satisfied with just that. Although Jobs revived Apple from the brink of bankruptcy with the iMac using PowerPC, he reportedly had many complaints about PowerPC.

The PowerPC for PCs did not meet performance improvement expectations.

The bigger core problem was heat generation. The heat from Macs using PowerPC was difficult to resolve. Due to excessive heat, Apple could not make notebook computers with the PowerPC G5 CPU. This was the dilemma of the AIM alliance.

At this point, Intel proposed the 'Core 2 Duo' CPU, which dramatically improved performance, to Apple. Attracted by Intel's proposal, Jobs abandoned PowerPC without hesitation in 2005.

Fifteen years later, Intel made the same mistake as IBM. MacBooks using Intel CPUs could not control heat. To cool the overheated CPU, cooling fans ran fiercely, earning the nickname 'hovering.' This happened as Intel delayed advanced miniaturization processes, causing severe CPU heat.

Unable to tolerate this, Apple introduced its self-developed M1 and expelled Intel CPUs. At this time, Tim Cook, Jobs' successor, abandoned Intel. In a way, the history that CPUs unable to manage heat are expelled repeated itself.

What if Sculley had chosen Intel CPUs instead of PowerPC? Perhaps Apple's performance would have improved, and Jobs might not have returned to Apple. Apple as we know it might not have existed. The failure of PowerPC laid the foundation for Jobs and Apple's revival.

Sculley admitted several mistakes. He confessed late, "My biggest mistake was deciding to adopt PowerPC for Apple. I should have chosen Intel instead of PowerPC." He also revealed that Andy Grove, then Intel CEO, personally urged him to use Intel chips.

PowerPC and Apple Silicon are similar but produced different results. Both chips are based on RISC. However, PowerPC failed, and Apple Silicon achieved great success.

The dominant analysis is that Apple Silicon succeeded not only because Apple designed well but also because it partnered with ARM and TSMC. ARM provided the basic design, and TSMC manufactured the chips, creating an ecosystem that solved the biggest cost problem that caused PowerPC's failure. The structure did not place a heavy burden on either side. At the same time, TSMC surpassed Intel in fine process technology, tipping the scales further in Apple's favor.