Most of the speculation about Apple Silicon centers on its performance versus x86 architectures. But that's not where its biggest threat to the PC lies.
Why? Apple's A-series processor-based products have been outperforming equivalent x86 products for several years. If pure performance were the driver, we'd already be seeing a performance driven uptick in iPad sales. While iPad sales have been solid and growing, pure performance hasn't been the driver.
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The Apple Silicon threat
Apple is going to ship increasingly feature rich Macs. In marketing terms, the Mac will become a much more differentiated product.
As Johny Srouji, Apple's SVP of Hardware Technologies, put it at WWDC 2020:
You want to deliver the highest performance at the lowest power consumption. And that's exactly where we want to take the Mac. . . . [O]ur plan is to give the Mac a much higher level of performance, while at the same time, consuming less power. . . . But that's just part of the story. Our scalable architecture includes many custom technologies, that . . . will bring even more innovation to the Mac. . . . This will give the Mac a unique set of features and incredible performance.
The Mac's appeal has always been based on differentiation. In early days, the OS GUI was very different, along with the unique, highly portable form factor. Then, as applications - PageMaker, PhotoShop - arrived for the graphics-first architecture, Mac won creatives.
After Windows 3.1 much of the Mac's GUI differentiation evaporated, and much of its market. With the advent of Unix-based macOS X, and the adoption of Intel processors, the Mac appealed to a new market of developers for the first time.
Free macOS upgrades threw down on Microsoft's Windows upgrade money machine, as did the iWork apps, to lesser effect, on MS Office. Then the design-forward MacBooks, Airs, and Pros -- with great battery life, brilliant screens, the best trackpads, and mostly competitive performance -- carved out solid market share growth.
Differentiation has always been at the heart of the Mac's appeal. And now its differentiation is going into overdrive.
But what about price?
That's the second jaw of the pincer movement. We've seen Apple recognize the power of price that Jobs never could afford to use.
After pushing iPhone prices up into the $1,500 range, to much outrage from the commentariat, Apple has retreated, scoring a runaway hit with the $399 iPhone SE. The newest 2020 iPad remains a customer favorite with a $329 list price. They know how to build and price for the low-end.
The Intel tax
At Apple's volumes - they've reportedly bought several quarter's worth of TSMC's 5nm capacity - the marginal cost of Mac Apple Silicon (MacAS) will be at most a few dollars higher than the processor that goes into an iPad Pro or high-end iPhone. More importantly, processor cost as a percentage of the total Bill of Materials (BOM) will be much lower than it is for an iPhone or iPad.
What that means is that MacAS will offer two excellent choices: either much higher performance at a price similar to competing Wintel machines, or similar performance at a lower price. With a healthy helping of unique features as a bonus.
So that's Apple's strategy: much higher performance notebooks and desktops at prices equivalent to today's high-end notebooks and desktops; and competitive performance notebooks - with unique features - at a new and lower price point. My guess for the latter: $799. My hope: $699.
And they will do this while keeping their industry leading gross margins, enabling them to continue to invest heavily in innovative technologies.
The Wintel merchant business model doesn't allow them to invest in specialty add-ons like the SOC neural processor and related software, so Apple will have a sustainable and increasingly differentiated platform for the next decade.
Today's iPad Pro is a content creation machine. Expect the new MacAS systems to take that to the next level.
"A bicycle for the mind" was an early Apple tagline. Well, strap on the goggles and helmet. The MacAS systems will be rockets for the entire PC industry.
Comments welcome. What iPad Pro feature would you most like to see implemented in a MacAS/macOS system?