Apple is replacing Intel's processor with its own ARM-based A4 system-on-a-chip in the new Apple TV set it unveiled Wednesday.
Apple already uses the A4 in its iPad, iPod Touch, and iPhone devices, and the latest move seems reasonable to many solution providers looking at a barrage of post-PC mobile devices.
"It has the feel of a knee-jerk reaction, but it does make a lot of sense," said Joshua Liberman, President of Net Sciences, an Intel partner. "Intel's design architecture is driving everything."
Apple's adoption of ARM-based processors in increasingly powerful machines is consistent with the industry's shift toward mobility and handheld devices, and Intel also seems to be planning to shift towards smaller, cheaper devices, Liberman said. Both vendors are secretive in their plans, he said.
Liberman said that Intel's Mobile Internet Devices [MIDs] have been "eclipsed" by netbooks, and suggested that Intel's acquisition of Infineon's wireless unit last week confirms that "there is no place for such a device if it is not a communications device."
Apple's decision to build its own chips is not nearly as much a shock as if it were to eliminate Intel chips from its Mac laptops, Liberman said.
The new Apple TV model is essentially a hefty smart phone which weighs just over a half-pound and relies on Internet streaming, rather than a hard-drive, for content. The new device costs just $99, and fits in the palm of a user's hand. The new Apple TV is the third attempt by the Cuppertino, Calif.-based company to build a set-top box that brings computing, and iTunes, to the living room television.
For the time being, the adoption of the A4 in the Apple TV is a setback for Intel as it misses a chance at capturing the market for non-traditional computing chip designs.
This comes despite Intel CEO Paul Otellini's repeated assurances of a close partnership with Apple and that Apple CEO Steve Jobs was pleased to hear of the acquisition of Infineon's wireless unit.
Intel has also had difficulty breaking into the new tablet PC market, where Apple's iPad is the dominant device.
Intel has been trying to make up for lost time with a shopping spree for security and wireless vendors and also by partnering with both Apple and its competitors in the smart TV market. Google, for instance, is planning to release a Web-based line of television sets built by Sony and equipped with Intel Atom processors this fall.
John Clark of Kaplan Computers, a Manhattan, Conn.-based Intel partner, said he does not see the A4 as a threat to Intel.
"The A4 is not nearly as powerful (as Intel processors), Clark said. "It seems to be a niche market Intel hasn't broken into, which would explain the Infineon purchase, so that maybe in the future they'll have phones with Intel chips in them. The Apple TV just isn't that much of a seller."