Many reports talk about Apple’s M1 chip. Here I would like to provide a few different opinions: how it helps Mac’s bottom line, re-enforces its competitive advantages and a new phase of SoC for PC.
Bottom Line —🤑
Again, Apple demonstrates it’s core competence as the top notch OEM by squeeze every last drop of mile from its cash cow. Wccftech estimated Apple could save $2.5 B a year by switching to its M1 chip.
- It’s about 9% (2.5/28.6 B by Apple’s statement) of Mac sales.
- Which equivalents to 8 B or 28% Mac sales growth (2.5 / 32% product gross margin).
- Which also implies Intel may lost $3.2 B revenue about -4% annual revenue (3.2/75.3 B by Intel’s 2020 forecast).
Obvious Intel is taking the direct hits. But if I’m other top PC OEMs, I won’t be too contactable with the recent situational 13% grow. Rather, I’ll be very worry about Apple will eat my lunch further soon too. After all in a mature market, the name of the game is Zero-sum.
Long Term Competitive Advantages
Cost saving is great, but not likely it’s only motivations. To understand that, let’s take a step back to see a bigger picture. Porter’s Value Chain is very useful framework for companies to strategize for competitive advantages. We can re-frame it as the Value Stack to fit Apple’s Platform Economy better.
The Value Stack
- On the top, Apple is marching toward one app-ecosystem to rule them all for app developers & users. Which is taking the game to the next level.
- The foundation is the device hardware value chain, which enables users to access applications/services & generate data/contents. Apple is leading this by vertically integrating the critical hardware technologies for speed & superior total UX. Furthermore, Apple is a few playing the long game very well, e.g. 4 years from PrimeSense acquisition to FaceID iPhone X launch. Now, one more thing/SoC on its belt. Even Samsung & Huawei can apply the same strategy on mobile, no one have any luck on PC, because the big middle man — MS is also a part of equation. Qcom’s been trying since 2016 & bets 5G will give Lenovo another lift. I do wish they luck. Nevertheless: it’s the apps, stupid.
Oh the middle, there is no much today. Because the end game of mobile platform war had been set long ago as a trilogy: 1 timing the start right, 2 invincible speed by vertical integration & 3 scaling for 100x by open platform.
Bonus: there will continue many regional/vertical platform wars on the edges. 2 extended markets are most interesting to me: A. Smart Watch as the personal health touch point & B. Smart Car as the transportation touch point. But, they are stories for other days.
Another Phase Change
System on a Chip is the mini-steel mills eating CPU/GPU’s lunch. SoC may started humbly for small systems because power & cost saving is more important than high computing power. Thanks to the mobile revolution, SoC become a key driver of the IC fabrication technology toward a hard physical limit (around 0.2nm with circuits 1 atom wide). Where local bus technologies, e.g. Peripheral Component Interconnect just can not keep up against it. Furthermore, all computing units(CPU, GPU, Neural Engine & more) are accessing the same Unified Memory pool. No more copying between different memory pools as other PCs do. It is a big performance boost & power saving. And the gap will be even bigger as image/video resolutions increases and more sophisticate AI use cases. As Disruptive Innovation theory predicts SoC in mobile, a low-end disruption gradually taking over the higher end markets, notebooks used to dominate by CPU/GPU.
- 3.9X faster video processing & 7.1X faster image processing. Thanks to its Unified Memory Architecture.
- 2X faster CPU performance or only using 25% of the power for the same performance.
- 2X faster GPU performance or only using 33% power for the same performance.
This is a phase change will not be reverted. And, now you know a bit more why NVIDIA is paying $40 B to acquire ARM.
Discretion
The opinions stated here are my own, not those of my company. Furthermore, considering them are thought experiments & open to debate, because strategy changes nothing without proper execution.
