SAN FRANCISCO – Apple Computer Inc. shares leapt to an all-time high on Wednesday, boosted by its decision to use Intel Corp. microprocessors to help it grab a bigger share of the desktop PC market.
Apple is tapping not only the latest chip technologies that rival makers of Windows-based computers will use but also the vast marketing power that Intel, the world's largest semiconductor company, delivers.
Apple unveiled its first two machines with Intel's Core Duo chip — an iMac and new laptop — on Tuesday and said it would not thwart users who would seek to run Microsoft Corp.'s Windows operating system on the machines.
With Intel processors inside the new Macs, their owners could run Microsoft Windows and software designed for it at full speed.
The move to Intel chips will boost Apple's sales and erase the perception that Macintosh computers lag behind Windows-based PCs in performance, analysts said.
"Now consumers can buy a Mac that is three times faster and for the same price," said Nathan Brookwood, an analyst with the Insight 64 research firm.
Apple shares (AAPL) soared $2.62, or 3.2 percent, to a split-adjusted record high of $83.48 soon after the Wednesday trading session opened on the Nasdaq Stock Market.
With the success of its iPod players and flashy retail stores, Apple has already begun siphoning customers from the Windows camp. After years of hovering around 3 percent, Apple last year cracked 4 percent of the U.S. PC market.
Apple's historic shift to Intel microprocessors came months earlier than expected. When it first announced plans to switch in June, Apple said it expected to begin making the transition by mid-2006.
Jobs said its entire Mac line will be converted to Intel by the end of 2006.
The shift comes as Apple's hugely popular iPods continue to enthrall the public. Apple brought in a record $5.7 billion in sales during the holiday quarter as it sold 14 million iPods — nearly three times as many units as it did in the same period a year ago, Jobs said. Meanwhile, Apple's online iTunes store has sold more than 850 million songs and 8 million videos to date, he said.
The company's stock shot to a 52-week high on the news.
But Tuesday's focus was on computers.
For years, Apple shunned Intel, which has provided chips that power a majority of the world's PCs, along with Microsoft's Windows software. In the late 1990s, Apple even ran TV ads with a Pentium II glued to a snail.
But Apple became increasingly frustrated in recent years as its chip suppliers, IBM Corp. and Motorola Corp.'s spinoff, Freescale Semiconductor Inc., failed to meet its needs for faster more energy efficient chips.
Of particular concern was IBM's apparent inability to develop a G5 chip that would work well in notebook computers.
Intel, on the other hand, has been focusing on developing chips specifically tailored for notebooks.
During last week's International Consumer Electronics Show, Intel unveiled its latest, the Core Duo, which features two computing engines on a single piece of silicon. It was that chip that Apple decided to fit into the new iMacs and MacBooks.
Though the change to Intel has occurred faster than expected, it still poses some risks.
Besides potentially alienating a fan base that's accustomed to doing things differently, Apple's move opens up the issue of backward compatibility and the possibility that PC users might run pirated versions of Mac OS X, Apple's critically acclaimed operating system, on their generally cheaper non-Apple computers.
Jobs demonstrated new software, called Rosetta, that will let owners of the new Intel-based Macs run older applications.
Though Windows sales could benefit, Microsoft risks losing ground unless its operating systems keep up with Mac OS X. Windows Vista, the next major update, won't be available until later this year — and its promised features copy many of those already in Mac OS X.
The change does not appear to have alienated Microsoft, however, which offers a Mac version of its popular Office productivity suite.
"We're formalizing our commitment to this platform," said Roz Ho, general manager of the Microsoft's Macintosh Business Unit. "We'll continue shipping Office [for the] Mac for a minimum of five years."
The new iMacs will have the same all-in-one design and screen sizes as the previous models, with prices remaining steady at $1,299 for the 17-inch model and $1,699 for the 20-inch computer. Jobs claimed the new models are two to three times faster than the iMac G5, based on an IBM chip. The MacBook Pros — with 15.4-inch displays — start at $1,999.
All the new computers will include Apple's Front Row software and a remote control, which lets users watch videos, listen to music or browse photos from across a room.
The machines also will be bundled with Apple's newly announced iLife '06 suite of digital lifestyle programs. In one of the updates, the latest version of iPhoto will let Mac shutterbugs share pictures much like bloggers, and podcasters share content.