It’s pretty evident that Apple isn’t wed to individual suppliers. Not only are they back to creating their own chips, but they are also one of the only 'compute' companies to have used each of the top 3 processor architectures over time—ARM, x86, and Power PC.
Apple's DNA in this area is untouchable, helping it to innovate at the confluence of software and hardware. There’s a reason why pinching and zooming on the iPad is snappier than anything people have ever seen, and it’s not entirely clear whether the software or hardware plays the larger part.
When a company decides to vertically integrate, as Apple has done with the iPad, it becomes subject to incredible pressure from outside. For example, how can Apple possibly stay ahead of the entire semiconductor universe, which will sell many more times volume than the iPhone and iPad.
Apple’s commitment to vertically integrate comes with a pressure to accommodate change—they simply can’t commit to one architecture for the long-haul. But changing puts strain on developers, since code must be recompiled and cross-compilers rarely maintain performance.
This week Apple confined developers to a specific set of tools (XCode). A lot of people think this is to kill Adobe Flash. Sure, that is a tactical reason, but there are much broader strategic reasons. By telling developers to move to XCode tools, Apple is setting the stage to potentially switch architectures.
History often repeats itself: In 2003, Apple advised developers to switch to XCode tools. This was not a coincidental move—2 years later Apple moved to Intel across its entire Mac line. Developers who complied could simply press a button and applications would run natively (full performance) on new Intel Macs.
Now consider this - Apple may have already switched without people knowing. Here’s an anecdote - the innards of Apple’s A4 (powers the iPad) have been speculated ad nauseum by experts, but the reality is no one knows what’s actually inside. This week, there was very surprising analysis that the A4’s die size far exceeds what it 'should' be (single core ARM Cortex A8 with a 64 bit memory bus and GPU).
This analysis is not yet mainstream, but will add tremendous fuel to the fire that perhaps the A4 is NOT an ARM architecture. In fact, it’s highly possible that the A4 is a dual core Power Architecture, which is what the PA Semi team worked with, prior to Apple buying them in 2007.
If this is indeed the case, then iPhone OS 4.0 would bring incredible speed improvements to the iPad, since it would no longer run applications on an ARM processor emulator. Can you imagine if OS 4.0 improved the iPad’s speed by 50% on day 1? Apple would be heralded as a software God. But in order for these speed improvements to be realized, apps would need to be written in objective C—which is exactly what Apple is now telling developers to do.
It’s clear from a strategic perspective that Apple has thought about vertical integration incredibly deeply. Their choice to enter the CPU business was not made lightly, and reflects a platform heritage and an ability to steer developers (afforded by huge network effects). We will likely find out what's really inside the A4 soon. But one thing is already clear: Apple is sowing the groundwork to make architecture changes seamless—developers will only need to flip a switch to give their apps blazing, native performance.
This incredible foresight will allow Apple to stay agile and maneuver in the face of what will be unrelenting competition from Intel, Qualcomm, and nVidia. Apple can essentially treat the CPU as a commodity—and this will enable them to continually adjust 'make vs buy' strategies, wield incredible power over suppliers, and build a long-term halo around their platform.
I find it fascinating that Apple has been so good at diverting attention to the Flash argument, that people don’t see the true genius behind Steve Job’s vision and moves. Apple is setting the stage to become one of the biggest winners in the storied history of vertically integrated companies.
