One of the more earth shattering pieces of Apple news this week came from Bank of America’s Merrill Lynch. “Apple Could Save $500 Million A Year Making Its Own PC Chips.”
That may sound like a fortune but relative to how much money Apple makes on the Mac line, it’s chump change. Apple pushes about 20-million Macs out the door each year. To save half a billion dollars Apple needs to save a mere $25 per Mac. Do the math. Apple-designed chips are not to save money.
Control vs. Differentiation
That a company wants to control its own destination is not a marketing secret. That a company needs to differentiate its products from competitors is nothing new. Control and differentiation are not opposites. They work in tandem and we see exactly the fruitage of that union with iPhone and iPad.
Back when Steve Jobs was alive Apple bought a chip design company. A few years later they launched the A-Series chips in iPhone and then iPad. Arguably, those Apple-designed chips are faster than competitors, are better at battery management (because Apple also controls iOS), and an easy point of differentiation vs. Samsung and Chinese knock-off makers.
In fact, Apple’s chip design team has done something of a blitzkrieg through the industry, outpacing Intel and Qualcomm and Samsung with impunity. Apple launched 64-bit A-Series chips a few years before competitors. Apple’s own chips are showing up in other products, too– Watch and AirPod come to mind (as well as MacBook Pro models with Touch Bar and Touch ID).
Is it logical to assume that Apple would continue chip development and eventually slide an A-Series CPU into a Mac? Yes. Why? Why not? The chip in iPhone X benchmarks well against the Intel Inside that grace the entry-level MacBook and mid-range MacBook Pro models, so it remains no stretch of the imagination to think that Apple wants to push the envelope for the Mac.
Intel sells ammunition to Apple’s competitors. Intel’s chips have hit something of a performance bottleneck– laws of physics on one side, a dwindling customer base on another side, and the entire world shifting itself to non-Intel Inside mobile devices.
Apple can read that handwriting on the wall and remains positioned to leapfrog Intel with its own chips. To save money? No. $500-million may seem like plenty of money but remember, that’s barely $25 per Mac each year. IF the future of the traditional PC is thinner, lighter, faster, and more capable– and with battery power that lasts all day and beyond– Intel Inside is not the right direction.
Intel’s chip manufacturing cycles put Apple on an even playing field with traditional Windows-based PC manufacturers. That was good back in 2005 when Apple switched from IBM and FreeScale’s PowerPC designs to Intel Inside, but these days Intel’s inability to design and manufacture chips that drive ever lighter, ever more power sipping designs is bordering on criminal.
Here’s what I see coming and soon.
First, an entry-level Mac notebook and perhaps a Mac mini model with an Apple designed chipset will launch. Think lower price and longer battery life. As the chips grow in power and capability, we will see Apple merge application development so iOS apps and macOS apps can peacefully coexist on the same Apple-designed chip platform.
Intel Inside will stay inside for a few years, especially on Apple’s most powerful Macs– but those days are numbered (even if there isn’t actually a number yet). Apple does not care about saving $25 per Mac. Apple cares about Macs that are better and faster and use less power than traditional PC notebooks.
Control and differentiation.