Apple's loss of iPod chief points to interesting new direction

As we well know, Tony Fadell, the former exec in charge of Apple’s iPod division, has stepped down for personal reasons and Apple has hired Mark Papermaster, the PowerPC chip guru in IBM’s hardware business.

We’ve been discussing the move and there are a few reasons for choosing someone from IBM to lead what is, in reality, an entertainment division. First, iPods are now essentially mini computers and devices like the iPhone and the Touch are running homegrown hardware – basically stripped down ARM chips made popular by PDAs from the turn of the century – and containing communications chips and flash memory for various suppliers. Next, you have issues with performance and battery life that only a hardcore hardware guru can attack with any intensity. The real goals, then, are for Papermaster to keep the chips flowing and to ensure that research and improvement is steady and, most importantly, secret.

This move also angered IBM who for years supplied Apple’s architecture and is now essentially out of the consumer hardware business except as behind-the-scenes producers of console chips. Some are even positing that Papermaster will be put in charge of Freescale, a chipmaker Apple is eying for takeover to add to P.A. Semi, which it already owns. IBM is now suing Apple and Papermaster for breach of contract.

“Mr. Papermaster’s employment by Apple is a violation of his agreement with IBM against working for a competitor should he leave IBM,” the company in a statement. “We will vigorously pursue this case in court.” The case was filed in the U.S. District Court in White Plains. N.Y.

Overall, what we have here is a move from a more creative position to what amounts to a logistical position – the sourcing of flash memory and processors for a growing portable entertainment market. Fadell made the iPod what it is while Papermaster has to keep the momentum going and ensure slow and steady improvements over the next few years.