Macs should be made by Dell, says Gartner

Increasing component costs and pressure to cut its prices mean Apple's best bet for long-term success is to quit the hardware business and license the Mac to Dell, analyst house Gartner has claimed.

In a surprisingly ambitious report, called Apple Should License the Mac to Dell, Gartner says Apple should concentrate on what it does best - create software - and make use of Dell's production and distribution infrastructure.

The report said: "Apple should leverage its close relationship with Intel and team up with Intel's closest ally, Dell. We recognise that this move would surprise and even shock many. We are aware that Steve Jobs cancelled previous Mac licences when he took over at Apple and that he guards the Apple brand zealously."

Up until around 1997, companies including Power Computing were given the rights to license Mac technology from Apple. However, when Jobs returned to the company, he attempted at first to renegotiate the licences but eventually opted to cancel them.

Apple increased its share of the PC market to around 4.6 per cent in July this year, according to analyst figures.

Gartner claims that with the right partners, distribution channels and a more affordable price, computers running the Mac OS could eventually account for 20 per cent of the total PC market.

According to IDC, Apple's sales - while still smaller than its major competitors - grew by double digits in the second quarter of this year. IDC attributed the growth to a successful transition to Intel chips.

According to Apple's third-quarter results, released in July this year, Mac sales were up 12 per cent compared with last year, during what was considered a poor quarter for the PC market. Apple said 75 per cent of all Macs sold during the period used Intel's chips.

However, Apple will not be able to substantially increase this growth on its own because of increasing pricing pressure, Gartner warned.

Apple's margins for its Mac business, currently around 40 per cent, are only sustainable because component makers such as Intel choose to prop up the business, Gartner claimed.

Given that HP has forced Intel to offer it comparable pricing to Dell, Intel is unlikely to continue to subsidise Apple, the analyst argues. "As a result of permanently changed market conditions, Intel has been forced to restructure and, in our opinion, cannot go on supporting Apple [or any other customer] indefinitely," the report said.

Whether Apple's Jobs would sanction any of the suggestions made by Gartner is hard to gauge. However, comments made by the Mac-maker chief executive earlier this year suggest he is not unduly worried by his company's limited share of the PC market.

Speaking at Apple's annual shareholder meeting in April, Jobs said: "One of the nice things about having four or five per cent market share is you don't really care if [the PC] market is down."

Andrew Donoghue writes for ZDNet UK