I fully expect any reduction in costs for Apple will get sent to their shareholders, not the consumers.
Apple's margins are consistent, if their costs go down significantly, pricing comes down or features increase. The iPad is a perfect example, for years it was $500 and they just kept increasing the feature-set until eventually they could deliver the base product for significantly less.
Shareholders benefit from increased market share just as much as they do from increasing margins, arguably more. The base iPad and the iPhone SE both "cannibalize" their higher end products, but significantly expand their base. I wouldn't be surprised at all to see a $800 MacBook enter their lineup shipping with the same CPU as the iPad.
While they won't be competing with Chromebooks for general education use cases, I could very well see Apple trying to upsell schools on a $599 alternative that happens to run GarageBand, iMovie, and even XCode.
While there is no digitizer, there is a keyboard and a touchpad. Also, I expect Apple is going to try to keep a gap between the base Mac and the iPad price-wise so they would add to the base storage and maybe RAM.
Then again, considering the pricing on the base iPad, maybe they will bring it down to $600.
If your phone is good enough to take care of your day to day computing, you can probably get by with an inexpensive all-in-one computer and save the headache of docking.
(And the GPU, and maybe even more RAM etc).
Then what is the point in docking at all? Now you have to keep track of what's on the dock and what's on the phone. Plus, by the time you integrate all this into a dock, you basically have something that costs as much as an inexpensive PC, so why bother?
When looking for IDEs or tooling on iOS I still have not found anything remotely professionally usable... (I mean Visual Studio + Reshaper like, not VS Code...) but perhaps somebody could enlighten me...
One problem is that people expect the CPU power of a laptop, which requires much more power and cooling than the typical tablet. As a consequence in tablet mode a Surface Book has about two hours of battery life.
Related to your example - $1 burgers are increasingly better, than you would expect. The difference between McDonald's midrange line and, say, a burger at a restaurant for $18 is negligible in flavor. I can no longer justify going to a restaurant and pay $18+tip for a burger.
Oh come on. I get that you're trying to make a point but this is ridiculous.
I’ll eat a $18 hamburger because it tastes really good - yes, about 18x better than a $1 burger.
I'd argue that the functional difference between a Honda Fit and a Tesla is less than the difference between the best McDonald's hamburger and an $18 hamburger. That's why I drive a Honda Fit. In the face of Tesla's increasing sales it would be pretty strange to assert that my taste was somehow universal.
And then we've come full circle to Apple products.
I eat at McDonald's all the time, and I also get pricey burgers ($13-18) from a local place that makes the best I've ever had.
You can't be serious. If you are, I've gotta say if anyone has a perception issue about their respective quality it's you.
I was making a point less about McDonald's being equivalent to a restaurant burger and more about people's perceptions of McDonald's and how bad it is. That is, there's probably a lot less difference in the taste of those burgers than a lot of people want to admit.
The other aspect to consider is consistency. I had a $14 burger at a restaurant on Saturday that I would have been happy to swap in any single burger I've ordered from McDonald's in the last 12 months. You may not consider it high quality at McDonald's, but you have a pretty good idea what you're going to get.
All I'm really doing is making a point that there's a bit of fetishism about luxury items going on these days. Are Apple devices generally higher quality than many competitors? Yes. Is the difference in quality in line with most people's perception of the difference in quality? I don't think so.
McDonald's has very high quality preparation standards. Their ingredients and techniques were constructed to facilitate their high-speed, high-consistency process, but prevent them from incorporating things that the overwhelming majority of burger consumers prefer.
For example, the extremely fine grind on the meat, the thin patty, the sweet bread, the singular cheese selection, the inability to get the patty cooked to specification, the lack of hard sear or crust and the maillardization that accompanies it, etc. etc. etc. At a minimum, people prefer juicier burgers with coarser, more loosely-packed texture, usually cooked to lower temperatures (though this depends on what part of the country you're in,) and the flavor and texture differential from a hard sear, be it on a flat top or grill, and toasted bread.
For consumers who, at least at that moment, have a use case that requires their food be cheap, fast, and available, well we know who the clear winner is.
In my new career as a software developer and designer, I use apple products. I am willing to pay for the reliable UNIXy system that can also natively run industry-standards graphics tools without futzing around with VMs and things, and do all that on great hardware. There will always be people who aren't going to compare bits pushed to dollars spent and are going to be willing to spend the extra few hundred bucks on a device they spend many hours a day interacting with.
This isn't about perception at all— Apple products meet my goals in a way that other products don't. If your goals involve saving a few hundred bucks on a laptop, then don't buy one. I really don't understand why people get so mad at Apple for selling the products that they sell.
I don't doubt you know more about food. If you applied that knowledge to my actual point instead of what it appears you assumed my point was, this assertion might have been correct.
That's not entirely your fault, I was making a slightly different point than the exiting conversation was arguing, so it's easy to bring the context of that into what I was trying to say and assume they were more related than they were.
The belittling way in which you responded though, that's all on you.
> This isn't about perception at all— Apple products meet my goals in a way that other products don't. If your goals involve saving a few hundred bucks on a laptop, then don't buy one. I really don't understand why people get so mad at Apple for selling the products that they sell.
My point, applied to this, would be to question what other products you've tried? My assertion is that people perceive other products to be maybe 50%-70% as good, when in reality they are probably closer to 85%-95% as good (if not better, in rare instances). That is a gap between perception and reality.
As applied to burgers, I was saying that people that refuse to eat at McDonald's because of quality probably have a very skewed perception of the actual differences in quality in a restaurant burger compared to a McDonald's burger.
I'm fully prepared to be wrong. I'm wrong all the time. I also don't see how anything you said really applies to my point, so I don't think you've really proven I'm wrong yet.
I wasn't annoyed by you misunderstanding, I was annoyed by you misunderstanding, assuming you understood my position completely because it would more conveniently fit with your existing knowledge, and then using that assumed position to proclaim your superiority and my foolishness.
It's not about deep conversational chess on my part, it's about common decency and not assuming uncharitable positions of others by default on your part. A problem, I'll note, that you repeated in the last comment.
Just the mere perception of quality will increase your satisfaction levels. The perception of lack of quality will reduce you satisfaction levels.
Thus I still maintain that your "perfect" $18 burger is only marginally better than McDonald's midrange burger. The fact that you actually spend time on making that burger more appetising - is proof that the low cost foods are getting better and better.
While focusing on my analogy, you literally prove my overall point.
30 years ago you weren't necessary, as low cost food wasn't nearly as good as today. Now - you have to exist to justify that premium.
But $18 burger is not drastically better than McDonald's $7 burger.
Try doing an actual blind test, with a control... because the simple fact of perception will make you think one is better.
This may be the single worst analogy I've ever seen.
There is no amount of money you can pay at McDonalds to get a good quality burger.
I don't spend $18 for burgers, since there are a million places where you can pay $5-8 dollars and get a damned good piece of beef. But not at McDonalds.
I’ve eaten at McDonald’s around the world, it really depends but they do have good burgers when they’re cooked right.
$5-8? At a food truck? The ones that make burgers of an extremely varied quality?
`(development cost + (units sold * incremental cost) ) / units sold`
But a lot of Macs have higher end Intel CPUs so the per/ unit cost of Intel CPUs is pretty damned high.
And the remaining 10% would indirectly benefit benefit their iPhone cash cow in the form of keeping people inside the ecosystem.
The Mac silicon is inheriting the investments Apple made in the iPhone CPUs. This will continue. The bits which Apple invests to make their existing hardware scale to desktop and high end laptops won't benefit the iPhone much at all. On future generation chips, Apple will spread the development costs over a few more units, but since iPhone + iPad ship several times more units than the Mac, the bulk of the costs will be born by them.
One of the two scenarios (or perhaps a mixture of both) are more likely, and I lean towards #1:
1. Apple decreases the price of the Mac to stay aligned with gross margin targets. This likely has a significant upwards impact on revenue, because a drop in price like this opens new markets who can now afford a Mac, increasing market share, driving new customers to their services, and adding a layer of lock-in for iPhone-but-not-Mac customers.
2. Apple uses the additional budget per device for more expensive parts/technology. They are struggling to incorporate technologies like OLED/mini-LED because of the significant cost of these displays and this would help open up those opportunities.
Why not got the same road with an MacBook SE? I even think this will be the first product out the pipeline.
MacPro buyers usually don't want to be beta testers and will probably be the last to transition out once horsepower is clearly there with mesurable gains.
Of course you'd still get 350$ range crappy product, Apple can't and don't want to compete a those levels.
This is sort-of-OK for consumers but amazing for Apple and its shareholers.
Greater marketshare also provides more value to shareholders meaning that shareholders still win, as do consumers.
More people with macs (and probably iPads/iPhones) would also increase other profit centers for Apple such as services (their highest profit center), warranties, and accessories. The profits and loyalty from these could easily far outweigh the $100-$300 of extra margin they might gain from keeping Mac prices the same.
Meaning that price cuts to macs might actually be more strategically beneficial (to EVERYONE) than hoarding higher margins.
This only makes sense if you know nothing about Apple's business.
You really think they're doing this to save $50 from ~5m Macs? You really think all this upheaval is for a mere $250m a year in savings? It'll cost them 10x that in pain alone to migrate to a new platform.
Come on now....$250m is nothing at Apple scale. Think bigger. Even if you hate Apple, think bigger about their nefariousness (if your view is that they have bad intentions - one I don't agree with).
Quarterly numbers come in between 4.5-5m units these days but point taken - I recalled numbers for the wrong timeframe.
> I also doubt the chips cost them 50$ per unit. The savings may worth few billions so it's not really like nothing.
The true cost of this move is reflected in more than the R&D. This is a long multi-year effort involving several parties with competing interests. People are talking here as if they just flipped a switch to save costs.
Let me make this clear. In my view, this is an offensive/strategic move to drive differentiation, not a defensive move to save costs (though if this works, that could be a big benefit down the road). Apple has a long history of these kinds of moves (that don't just involve chips). This is the same response I have to people peddling conspiracy theories that Apple loves making money off of selling dongles as a core strategy (dongles aren't the point, wireless is; focusing on dongles is missing the forest for the trees).
The question isn't whether it suits them. The question is: "Why did they choose to take on the level of risk in this portion of their business and what is the core benefit they expect?"
If the the main reason was cost savings, this would be a horrible way to go about it.
There's a better answer: Intel can't deliver the parts they need at the performance and efficiency levels Apple needs to build the products the way they want to build them. This is not a secret. There is a ton of reporting and discussion around this spanning a decade about Intel's pitfalls, disappointments, and delays. Apple might also want much closer alignment between iOS and MacOS. Their chip team has demonstrated an ability to bring chipsets in-house, delivering performance orders of magnitude better than smartphone competition on almost every metric, and doing it consistently on Apple's timelines. It only seems natural to drive a similar advantage on the Mac side while having even tighter integration with their overall Apple ecosystem.
If you want to boil this conversation into one dimension, I'm not your guy - you'd be better suited by finding someone else to talk to. Cheers!
2. I think you actually missed the point of the conversation. OP said "that's still an insane amount of additional profit per unit to be extracted" and followed that up with "amazing for Apple and its shareholers."
It is not insane at all. And not amazing. It just comes off as naive to anyone who's worked in these kinds of organizations and been involved in similar decisions.
I think it's hard for some people to comprehend that trying to save $1b a year for its own sake at the scale of an org like Apple can in many cases be a terrible decision.
Half the fun is writing down your own thoughts!
> You came with your strawman that it was for its own sake
That's possible. I saw the emphasis placed differently than you did even though we read the same words. Probably describes the nature of many internet arguments. Happy Monday - I appreciate you pushing me to explain myself. Seems like others were able to get value out of our back and forth.
Yes, they're a big company. But they're also a mature company. A lot of their efforts are going to be boring cost-cutting measures, because that's how mature companies stay profitable.
This isn't a zero sum game. Being able to ship less expensive computers which perform better is a win for consumers and Apple shareholders at the some time.
The only loser here is Intel.
Don't we basically know that from the Surface X?
Don't have to venture that far, we know it from the iPad Pro.
I also don't believe it's reasonable to assume that switching to arm is as simple as putting an iPad cpu into a laptop shell.
Here is an estimate that their 2018 model costs 72 just to make not to design and make.
https://www.techinsights.com/blog/apple-iphone-xs-max-teardo...
The a14 that will power a MacBook is likely going to be more expensive not less. Especially with 15B transistors on the a14 vs less than 7B on a12.
Average selling price of Intel cpu looks like around $126. This includes a lot of low end cpus which is exactly the kind of cpu apple fans like to compare.
Apple may realize greater control and better battery life with the switch but they won't save a pile of money and thoughts about increasing performance are fanciful speculation that Apple, the people with the expertise are too smart to engage in.
Which means the actual per-CPU fab cost is going to become a smaller part of the complete development and production cost of a run. And that total cost is the only one that matters.
I expect savings can still be made, because Apple will stop contributing to Intel's profits. On the other hand I'm sure Apple was already buying CPUs at a sizeable discount.
Either way it's an open question if Apple's margins are going to look much healthier.
IMO an important motivation is low power/TDP for AR/VR.
Ax will also eventually give Apple the option of a single unified development model, which will allow OS-specific optimisations and improvements inside the CPU/GPU.
Ax has the potential to become MacOS/iOS/A(R)OS on a chip in a way that Intel CPUs never could.
Here’s hoping anyway!!
You are overestimating how much a CPU costs...
It also removes any need for a dedicated GPU in their high-end laptops, which is probably $200 alone.
I have no idea how they justify the prices for their lower end laptops as-is, as they have worse screen and performace than recent iPads in pretty much all cases.
This isn't "sort-of-ok", it's "bad-for-customers" and "bad-for-developers".
As a consumer you shouldn't be running unsigned software because you're putting not only your data at risk but any data you have access to.
And as a developer on mac you can still run anything reasonably well in a VM. If you're using node, you should be running that in a virtualized environment in the first place, albeit I'm too lazy myself to always set that all up.
Actually it's pretty amazing that now we'll be able to run an entire x86 OS environment on an ARM chip and get very usable performance too.
Just curious: why should node be ran in a virtualised environment for development? Is it a security concern? Does that apply to languages like python too? Would you be happy running it in a Docker container from macOS?
Thanks!
I'd say that we've moved away from virtualisation completely, we now use containers, so developers will expect native performance, as we get on other platforms.
If they're already on macOS, that's a thing.
1. This is risky for consumers. Whereas the PPC->x86 move was clearly a benefit to consumers given how PPC was lagging Intel at the time, x86 had proven performance and a massive install base. It was low risk to consumers. This? Less so. Sure iOS devices run on ARM but now you lose x86 compatibility. Consumers need to be "compensated" for this risk. This means lower prices and/or better performance, at least in the short-to-medium term; and
1. This move is a risk for Apple. They could lose market share doing this if consumers reject the transition. They wouldn't undertake it if the rewards didn't justify the risk. They will ultimately capture more profit from this I'm sure but because of (1) I think they may well subsidize this move in the short term with more performance per $.
But I fully agree with an earlier comment here: Apple has a proven track record with chip shipments and schedules here so more vertically integrated laptop hardware is going to be a win, ultimately.
EXACTLY.
If you are a photographer, a developer, a graphics designer, a musician, a teacher, or whatever, and you are looking at buying a new Mac, what is going to get you to buy the new Apple Silicon powered Mac which is almost certain to impact your workflow in some way? If you are making purchase decisions for classrooms, what makes you buy 200 Macs with a new, unknown architecture?
The first generation of Macs on Apple silicon absolutely needs to have a significantly better price/ performance point versus the current generation or they won't sell to anything more than the most loyal fans. If the new Macs come out and pricing is not good, I could seriously see a sort-of anti-Osborne effect where people gravitate towards Intel based Macs (or away from Macs entirely) to avoid the risk of moving to new architecture.
If anything, I expect margins on the first couple generations of Macs to go DOWN as margins on the first couple generations on all Apple products are lower (also public record).
Yes, the "unknown" architecture powering the highest performing phones and tablets.
Apple has plenty of problems selling to schools for classroom use because other platforms have invested more in that use case. But ISA being the reason? No. Simply no.
IT managers are conservative, if they make a bad call, they have to support crap equipment for the next 5+ years or so. Yes, I'm aware Apple's CPUs are in the iPhone and iPad, but it's a huge change for the Mac and it's a big risk for people making those purchase decisions.