By Prince McLean

Published: 09:00 AM EST

Sources familiar with Apple's plans for 2008 report that the company is eyeing a new mobile processor from Intel code-named Silverthorne for use in a new generation of handheld devices. That has broad implications for Apple's expanding role in consumer electronics, and holds out the prospect for the company to play the savior for a chip originally designed to power the second-generation of Microsoft's beleaguered UMPCs.

The market for tablet sized computing devices has repeatedly disappointed in the past. Enthusiasm for "pen computing" erupted in the early 90s led by Go's PenPoint OS (below, running on the short lived, early 90s AT&T EO) and followed by Microsoft's Windows for Pen, but the market didn't respond appreciatively to products as delivered. Handheld processors of the day were often designed for more conventional laptops and couldn't really support the performance required for tablet features and the power efficiency demanded by more compact devices with smaller batteries.

in 1993, Apple released the Newton MessagePad using a new processor architecture the company designed in collaboration with Acorn Computer, called ARM. While the Newton had the computing power and efficiency to handle advanced features such as handwritten recognition, it also had other problems, as described in Newton Lessons for Apple's New Platform. Among the most significant was that by the mid 90s, Apple itself was in serious trouble. In 1998, Steve Jobs canceled the Newton as part of efforts to get the company back on track.



The Troubled Tablet PC

In the second half of the 90s, Microsoft began delivering portable computing initiatives based on Windows CE, a new mobile operating system that shared little in common with the desktop Windows apart from its name. The WinCE-based Handheld PC in 1996 experimented with tiny clamshell form factor PCs but couldn't garner much interest. After the explosion of the Palm Pilot PDA, Microsoft rebranded its efforts as Palm-Sized PC in 1998 and after being sued by Palm, Pocket PC in 2000.

After a decade of disappointing failure in the mobile devices arena, detailed in The Spectacular Failure of WinCE and Windows Mobile, Microsoft shifted its attention away from WinCE to offer handheld tablet PCs based around the desktop version of Windows. In early 2006, Microsoft unveiled Origami, rumored to be a portable Xbox or possibly a media player to rival the iPod. Instead, it turned out to be a new version of the Tablet PC specification, later designated UMPC for ultra mobile.

The rebrandings did nothing to boost sales however. One reason for the UMPC failing to take flight was the same price to performance problems that plagued earlier devices. Typically using lower powered versions of Celeron M or Pentium M chips, UMPC devices such as the Samsung Q1 debuted at around $1000, but delivered worse battery life than a laptop, less computing power, and a lower resolution 800x480 screen in exchange for a thicker tablet form factor and a stylus-sensitive display. The market didn't respond appreciatively.

When CNET.co.uk pitted the 2006 Origami Samsung Q1 UMPC against the 1997 Apple Newton MessagePad 2000, it declared the decade old Newton as the overall winner. The failure of UMPC to functionally outperform an ancient technology relic has led many to believe that there is hope for the ultra mobile form factor outside of Microsoft.



The Linux Ultra Mobiles

While Intel's collaborations with Microsoft haven't grabbed much interest, Linux-powered ultra mobiles have recently been stealing the limelight. The ASUS Eee PC is a $300 to $500 low end laptop without a stylus or touchscreen (below). It coasts along using Intel's Dothan processor, similar to the CPU inside the Apple TV. Rather than trying to be a tablet, the device acts as a low priced laptop alternative. While it isn't directly comparable with Microsoft's Tablet PC vision, it has the same screen resolution as the UMPCs: 800x480.



Last year, Intel promoted a prototype of the Eee PC alongside the "Classmate PC," a demonstration designed to compete against the "One Laptop Per Child" OLPC project's $100 XO-1 (below). That ultra mobile device is also based on Linux, but uses the Geode processor from AMD. Its increasing popularity in developing nations has raised some concern for both Intel and Microsoft that market volumes could derail the economies of scale that have long favored the WinTel PC.



A Silverthorne Lining for the Dark Cloud of Microsoft's UMPC?

While the low end of ultra mobiles is generating some excitement, the future of Microsoft's UMPC itself is anything but certain. Earlier this year in April, Intel unveiled the Silverthorne processor and its Menlow platform as the basis for the second generation of UMPC devices and what Intel calls Mobile Internet Devices. However, the only "MID" units most consumers would recognize are Apple's iPhone or iPod Touch which use Samsung ARM processors, and Nokia's Linux-based N800 Internet Tablet, which features a processor from Texas Instruments.

Convincing Apple to to use the Silverthorne processor architecture in upcoming products related to the iPhone and iPod Touch architecture, or alternatively in an ultra mobile version of the MacBook line, could serve to throw Intel back into the ring in the mobile processor business. Mac sales are outpacing the growth of PC competitors by a wide margin, and new Mac-derivative devices such as the Apple TV hold promise in markets that aren't yet established, as described in Apple TV Digital Disruption at Work: iTunes Takes 91% of Video Download Market.

Additionally, Apple's iPod sales are continuing to grow despite the general malaise of the entertainment gadget industry. The iPhone launched into second place in North America with 27% of US Smartphone Market. Canalys figures indicate that the iPhone Already Leads Windows Mobile in US Market Share. Leveraging its relationship with Apple to push its latest processors would be a major coup for Intel, which has hit repeated setbacks in the development of processors for both mobile phones and in ultra mobile computing.

What Would the Jesus Phone Use?

Apple's close partnership with Intel, which went public in 2005 and resulted in the rapid migration of Mac models from PowerPC to Intel's Core processors throughout 2006, did not directly impact the architecture of the iPhone. Instead, Apple continued using the same ARM processors for its new smartphone as it had been using in the iPods since 2001, as described in Origins: Why the iPhone is ARM, and isn't Symbian.

Apple has long term contracts with Samsung for purchasing Flash RAM, a relationship that likely made Samsung's ARM-based 'system on a chip' components an easy choice for the iPhone and the closely related iPod Touch. However, sources indicate that Apple may be moving away from ARM and toward Intel's x86 compatible Silverthorne processor family in new models of the iPhone, iPod, or related devices that could include a tablet or micro-laptop form factor.

That planned move could explain why Apple kept third party development efforts closed on the iPhone. However, Apple's Universal Binary architecture on the Mac allows developers to simultaneously target PowerPC and Intel processors, as well as 32-bit and 64-bit architectures and single and multiple core chip designs. Since it would also be unworkable for Apple to deliver a development platform that only targeted new iPhone models, even if Apple moved from ARM to Intel's new ultra mobile offerings in new iPhone models, it would still need to support the ARM architecture for developers.

Trading Places in the CPU Market

Apple's processor agnostic operating system technology allows it to deploy Mac OS X on whatever processor architecture offers the best in price and performance. In contrast, Symbian, Palm OS, and Windows Mobile/WinCE are all primarily tied to ARM, while Microsoft's desktop Windows XP/Vista is tied to x86 compatible processors.

Mac OS X already runs across three very different processor families. Apple has the flexibility to migrate the iPhone to a new CPU or alternatively to straddle the fence, with its mobile devices continuing to use ARM while more complex portable devices take advantage of processors like Silverthorne. Either way, Apple will continue to use Intel's most appropriate processors for low power, mobile, portable, desktop, workstation, and server processors across its Mac product line, and the Mac market is now large enough to decisively factor into Intel's roadmap.

That's a dramatic reversal of the situation Apple found itself in just a couple years ago as the last computer maker using PowerPC. Now, rather than begging its PowerPC partners to deliver customized parts suitable for the products it wants to build, Apple has access to a smorgasbord of CPUs from Intel and enthusiastic support for the kind of hardware applications both companies share a vision for delivering. Before partnering with Apple, Intel expressed frustration with the lack of creativity among the more conservative PC makers.

It's also a reversal of Apple's longstanding situation as the minority alternative platform among PCs. Being the only significant vendor of a non-Windows PC long meant Apple couldn't benefit from the economies of scale enjoyed by larger PC makers such as Dell and HP. Now, Apple has access to take direct advantage of Intel's latest and greatest processors and chipsets in its Mac lines, a leveraged flexibility that resulted in PCWorld awarding the MacBook Pro this year as the fastest laptop for running Windows Vista.

In addition to having broad access to the bleeding edge of desktop and laptop processors, Apple also now acts as the world's largest manufacturer of music players and mobile internet devices. Dominating consumer sales with the iPod has given Apple favorable volume pricing in Flash RAM, ARM processors, and related mobile components.

That in turn helped the company to deliver the iPhone with far more usable storage at a price very competitive with high end phones with less RAM; the iPhone typically delivers 64 times as much Flash as other smartphones. When the cost of mobile service is included, the iPhone is even several hundred dollars less than simpler $99 smartphones such as the Motorola Q running Windows Mobile, as outlined in iPhone Price and Profits vs Nokia, LG, HTC, RIM, Palm.

On page 2 of 2: Apple Goes Ultra Mobile; The Writing is Not On the Tablet; Every Rose Has Its Silverthorne; and The Silverthorne Road Map.