Rumor: Apple, Motorola at War over Vaporware G5, MHz Gap since 1999?


Apple may be preparing to take legal action against Motorola for its inability to deliver PowerPC processors on time and in sufficient volume, according to a report at MacBidouille.

The central problem appears to be the unavailability of Motorola's PowerPC 7457 chip, which was meant to power the high-end G4s, currently topping out at 1.42GHz. Motorola allegedly will not be able to provide sufficient quantities of the PPC7457 for another two months.

Apple has reportedly instructed its legal division to prepare documents for a possible action at law relating to alleged contract breaches. These include Motorola's contractual obligation not to cease G3/G4 production without giving at least one year's notice to Apple.

Second, Motorola reportedly ceased development of the G5 chip, citing manufacture for only one customer was an uneconomic proposition, given the limited quantities involved. Motorola apparently informed Apple of this only in January. Apple had done at least 14 months' work preparing for the G5 chip, with motherboard architecture already finished and blueprints prepared for production. The cost to Apple was supposedly $50 million.

Third, Apple argues that Motorola has been incapable of supplying chips of sufficient clock speed since 1999, costing Apple an estimated $250-300 million in sales. Future sales losses to Wintel machines as a result are forecast to be $150-$200.

Apple allegedly will request $300-$500 million in compensation, but will wait until after the WWDC and PPC 970 announcements before notifying Motorola.

Analysis: For a rumor, there's an unusual amount of detail here, which suggests there is a strong basis for these allegations. Certainly, Apple would have a case in law if Moto has not fulfilled its contractual obligations, particularly as regards the purported 'G5'. We'd also say that Apple's estimates of its losses to Wintel due to the 'MHz myth' are somewhat conservative. Of course, this may well be simply legal wrangling which will never reach court. An undisclosed settlement - much like that MS reached with Apple in 1997 over outstanding patent disputes - would be more likely. That one reportedly cost MS close to $1 billion. We wonder how much beleaguered Moto would fork up?