Wall Street weighs in on Apple-Intel rumors

According to PiperJaffray, an investment and research firm which closely follows the Mac maker, there are several positives and negatives to a switch to Intel, but ultimately the long-term positives will outweigh the negatives.

"There are clearly risks to transitioning to a different processor after more than a decade on the IBM platform," said Gene Munster, a senior analyst at the firm. "The most visible risk is that there could be some push back in the developer community, as the move would require programmers to rewrite some applications."

On the other hand, Munster listed three key reasons why Apple would benefit from a switch to Intel. First and foremost, the analyst believes Intel will afford Apple a more consistent supply of microprocessors. He notes: "Apple has encountered many instances in which the supply of IBM PowerPC processors has been inconsistent and resulted in inventory constraint issues for Macs."

Munster also said the move would help Apple become more competitive with its pricing in the PC market and possibly lead to a larger developer community. "Over time, we believe an Intel-based Mac would lead to a larger developer community, potentially providing for greater breadth of applications for the Mac."

However, not all analysts view Apple's potential move to Intel equally. Shaw Wu, an analyst for American Technology Research, maintains his belief that there is no material cost advantage in using Intel x86 chips over IBM's PowerPC. "We believe IBM has sacrificed profitability to drive price points attractive to customers that use PowerPC," the analyst reiterated in a research note released to clients today.

Additionally, Wu says Apple could risk alienating some of its loyal customer base and may cause a freeze in Mac purchasing while users evaluate the potential platform change. He noted: back in 1984 to 1986, Apple lost a lot of customers when it moved from the Apple II to the Mac. The same was true in 1994 when it moved from the Motorola 68000 family of processors to PowerPC.

For these reason, Wu believes a more likely scenario is for Apple to support both the PowerPC and x86 architectures. Either separately or in conjunction with an Intel-related announcement, the analyst said Apple could potentially announce development and support of new dual-core G5 and G4 processors from IBM and Freescale, respectively.

Apple may also soon up the standard memory in its new Mac mini desktop from 256 MB to 512MB, the analyst said. "We have heard many users complain about the low amount of included memory in the Mac mini and the difficulty in installing additional DRAM."

Neither PiperJaffray nor AmTech Research is jumping to change their fundamental view on Apple just yet. Both firms maintain their respective ratings on Apple of "outperform" and "hold." PiperJaffray has set Apple's price target at $51 a share while AmTech, concerned with high investor expectations, targets the stock at $40 a share.