Is Apple Set to Make Its Own ARM Chips for the iPhone?

Forbes dissects the management change announced Tuesday at Apple’s  (AAPL) iPhone division, concluding that Apple plans to make its own iPhone processor chips. It’s interesting speculation.

What we know for sure is that Tony Fadell — the founder of iPod engineering who Fortune calls “The man who made the iPod” — is stepping down as head of SVP for the iPod division. (Fadell replaced Nextie and Friend-of-Steve Jon Rubinstein.)

Fadell is being replaced by Mark Papermaster, VP for blade server development at IBM (IBM). Apparently IBM is suing to enforce a non-compete, and original speculation (before his appointment to head iPod/iPhone R&D) was that he was being hired to make OS X-based Xserve boxes.

Now that Papermaster’s new role is out, pundits point to his earlier role as a PowerPC microprocessor architect. Last June, CEO Steve Jobs said the ex-PA Semi engineers are making “system-on-chips for iPhones and iPods.”

Brian Caulfied of Forbes claims that the tea leaves all point in one direction: Papermaster’s CPU expertise, the purchase of PA Semi, its sourcing of ARM-based processors from cellphone rival Samsung (SSDIF.PK), the availability of ARM reference designs and fabs to make them.

Caulfied has put 2+2 together, but right now it’s not clear if he has come up with 3 or 4 or 6. ZDNet wonders whether Apple wants Papermaster to run Freescale, which seems even more improbable. Still, PA Semi was purchased for some reason, and competing with Intel (INTC) in laptop CPUs is not among them.

Once upon a time, I claimed that Apple’s iPod and iPhone were an example of open innovation: Apple sourcing outside rather than using its 1990s-era NIH.

It appears I was wrong: open innovation (sourcing outside components) was an entry strategy for the iPod and iPhone, but the goal was always vertical integration. With iTunes, iTunes Music Service, OS X on the iPhone and now the new mystery chip, Apple will be more vertically integrated than it ever was on the Apple II or Macintosh.

Steve Jobs has always had a proprietary view of the ecosystem: we’re creating the value, and we want to capture as much as possible. Although Jobs was forced out of Apple in 1985, this culture lived on for a decade afterward. I experienced it first hand helping HP (HP) make color inkjet printers that competed with Apple’s dot matrix printers.

When Jobs returned to Apple in 1997, he killed Apple’s only authorized cloning experiment, and with it both killed two startup companies and also alienated a Fortune 500 multinational and key Apple supplier, Motorola (MOT).

As elsewhere, Jobs is swimming against the tide. In the PC business, IBM went away from vertical integration and made Bill Gates and Andy Grove rich while eventually failing as a PC maker. Many cell phone makers (like HTC and Motorola) are procuring their OS on the open market, but there are two important exceptions: RIM (RIMM) (with its BlackBerry) and Nokia (NOK) (with its decision to purchase Symbian).

Comments

[Julian Ivan...:]

Right but wrong. Apple isn't creating a closed ecosystem at all. Its intending on using a variant of an OS (OS X) which is widely available on iPhones and iPods, and Macs (don't forget about those, will you) on portable devices running on ARM-based chips - an architecture actually helped launched and nurtured by Apple before it sold its stake in the company some years back.

Its launched an SDK for the platform, so the only proprietary aspect is the chipset itself - in other words the manner of the integration between the components and the minaturisation which can be achieved by custom design in-house rather than having to rely on off-the-shelf parts.

The key is, its the same architecture, just adapted and developed in-house, as every other device out there, so its nothing like the original Macintosh paradigm where everything from the OS to the IO ports were propritatary.

I wish writers would stop making this simple error. Vast swathes of OS X are open source. The development platform - XCode - allows tou to code for Macs, iPods and iPhones, and the chips Apple uses - whether designed in-house or not, are based on a widely used and non-proprietary architectiure. Jobs isn't swimming against the tide at all. What he's done is found the ripd tide to drag him and Apple as far away from its competitors as possible, as quickly as possible, leaving them all beached with no hope of catching up.

2008 Nov 05 05:36 AM

[rd4sndk:]

Tom... You are absolutely right that Apple is merely taking advantage of the large number of processors used in its portable platforms (ipods and iphones). Integration of all peripheral subsystems (sRam, touch screen interface, multiple discretes passive and active, accellorotemeter interface etc) could cut cost significantly. A 20% reduction in cost on 200 million portable devices on a $40 cost basis could save $1.6 billion annually and move its iphone price point below $100 subsidized. I also believe they'll target power consumption as a major design goal besting the competition. Lower power processor design was PA semi speicialty. By summer next year we should see a new platform based on the new processor design. Papermaster is only needed for management of a processor road map that will compete against the competition no doubt will do catch up within a year. Apples competition will be TI, Samsung and other mobile processor OEMs. If TI and Samsung were smart they would start now leveraging their expertise on providing a low cost low power consumption pocket computer for other mobile OEMs. To wait until Apple debuts will be in my opinion disasterous of them and mobile OEMs.

On Nov 05 05:36 AM Tommo_UK wrote:

> Right but wrong. Apple isn't creating a closed ecosystem at all.
> Its intending on using a variant of an OS (OS X) which is widely
> available on iPhones and iPods, and Macs (don't forget about those,
> will you) on portable devices running on ARM-based chips - an architecture
> actually helped launched and nurtured by Apple before it sold its
> stake in the company some years back.
>
> Its launched an SDK for the platform, so the only proprietary aspect
> is the chipset itself - in other words the manner of the integration
> between the components and the minaturisation which can be achieved
> by custom design in-house rather than having to rely on off-the-shelf
> parts.
>
> The key is, its the same architecture, just adapted and developed
> in-house, as every other device out there, so its nothing like the
> original Macintosh paradigm where everything from the OS to the IO
> ports were propritatary.
>
> I wish writers would stop making this simple error. Vast swathes
> of OS X are open source. The development platform - XCode - allows
> tou to code for Macs, iPods and iPhones, and the chips Apple uses
> - whether designed in-house or not, are based on a widely used and
> non-proprietary architectiure. Jobs isn't swimming against the tide
> at all. What he's done is found the ripd tide to drag him and Apple
> as far away from its competitors as possible, as quickly as possible,
> leaving them all beached with no hope of catching up.

2008 Nov 05 08:06 AM

[PK de C'ville:]

Seems to me, Apple knows sw is the hardest thing to do and they OWN and EXPAND the "bestest" OS.

All Apple is doing is leveraging it's unbeatable OS through phenomenal creation, integration and marketing of great products and systems.

(If you ever been to Apple's NYC 5th Ave glass box, you've also experienced a strong dose of Apple's temple architecture marketing on the side.)

"Apple is a one trick pony," says Ballmer, but what a pony!

2008 Nov 05 11:26 AM

[dragon10:]

They made brick, are they was set?

2008 Nov 05 11:46 AM

[dragon10:]

just in case

2008 Nov 05 11:47 AM

[dragon10:]

wellcome to the millenium bug..... or 21st century

2008 Nov 05 11:58 AM

[PalinTologist:]

...or the the English speaking world

2008 Nov 05 01:16 PM