Intel Inside will no longer apply to just Windows-based PCs with confirmation that Apple will use Intel processors in future Macs. The switch will make Macs, at least in theory, capable of running arch rival Microsoft’s operating system.

The change has been on the cards for some time. Steve Jobs, Apple's CEO, told the company's annual Worldwide Developers Conference in San Francisco that for the past five years, every release of Mac OS X has been designed to run on both IBM's PowerPC processors and Intel processors.

"Mac OS X has been leading a secret double life," Jobs said, while displaying visuals for his keynote speech from a Mac running a 3.6GHz Pentium 4.

The first Macs with Intel processors will appear next year, with the switch to Intel mostly completed by end of 2007. Apple did not say which specific Intel processors it would use, nor did it say which Mac models would be the first to run with Intel chips.

Apple will not allow the Mac OS to run on non-Apple hardware; however, the reverse may not be prohibited.

"In theory, in the future, you will be able to run native Windows on a Mac and Apple will not do anything to prevent it," said Michael Gartenberg, vice president and research director with Jupiter Research.

So what’s in it for Apple? Jobs cited Intel's better power performance per watt as well as shortcomings of IBM's PowerPC chip. IBM's G5 processor is very competitive with the Pentium 4 when it comes to desktop performance. However, the latest version of the chip required liquid cooling to run. So far the G5 has yet to make it into a notebook and there’s no sign of a 3GHz Power Mac.

"It kept Apple in this reactive mode where they had to explain why a 2GHz Power PC is as competitive as a 3GHz Pentium," said Gartenberg. He adds that the switch to Intel would lead to more competitively-priced Macs.

Some analysts labelled the move "risky" and "foolish."

"While we can see why moving to a dual architecture approach may bring some benefits, a wholesale move away from the IBM chips would be extremely foolish. Intel is not the 'de-facto leader in processor design' that it was a few years ago; in the recent past, Intel has been out-innovated by both AMD (with a better approach to 64-bit computing) and IBM (with a better long-term strategy around multicore chips)," wrote Gary Barnett, Ovum research director in an email to the IDG News Service.

Apple's next challenge will be recompiling current Mac apps so they will run on Intel-based machines — ideally using universal binary code that contains the elements required to run on both Intel and IBM architectures. Apple's Xcode development environment would be fundamental to this transition

Apple announced the release of a $999 (£545) Developer Transition Kit, which consists of an Intel-based Mac development system and preview versions of Apple's software.

The company plans to include technology called Rosetta in the first computers it ships with Intel chips, Jobs said. Rosetta, named after the famous stone used to translate Egyptian and Greek in ancient Egypt, will allow code created for the PowerPC to run on Intel processors at a pace Jobs termed "fast (enough)". Jobs loaded several PowerPC-based applications during a demonstration, such as Adobe's Photoshop, which took a fair amount of time to boot as the binary code was translated.

Jobs also confirmed that Apple was currently developing the next version of Mac OS X, codenamed Leopard, due out at the end of 2006 or early 2007. He also said that iTunes would support podcast radio broadcasts and that a preview release of QuickTime 7, with support for the H.264 video codec, was available for Windows.

Tom Krazit of IDG News Service contributed to this report.