Apple can fight Microsoft Windows with M2 chip

Apple CEO Tim Cook (R) reviews a newly redesigned MacBook Air laptop during WWDC22 at Apple Park on June 6, 2022 in Cupertino, California. Apple CEO Tim Cook kicked off the annual WWDC22 developer conference.

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Apple New laptops announced on Monday, featuring the iPhone maker’s next-generation in-house chips, could pose new challenges to Microsoft’s lucrative Windows business.

Since Apple started selling Macs powered by the homegrown M1 processor in late 2020, the company’s PC business has taken off. Earlier this week, Apple introduced the M2, which will debut in the new MacBook Air and 13-inch MacBook Pro.

The new chip will include 25% more transistors and 50% more bandwidth than the M1.

Mikako Kitagawa, an analyst at technology industry research firm Gartner, said Apple could continue to gain market share with its M2 architecture. According to Gartner estimates, in 2021, Apple holds 7.9% of total PC shipments worldwide, while Windows controls 81.8%. The company expects Apple’s market share to grow to 10.7% by 2026 as Windows’ market share drops to 80.5%.

Kitagawa said an updated forecast that is likely to make Apple’s performance look stronger will be released in the next few weeks.

Apple’s Mac business has been revived thanks to new devices featuring the company’s own chips to replace microprocessors from Apple. Intel. First was the MacBook Air released last year, followed by updated iMac, Mac Mini, and MacBook Pro laptop models, and a new model for power users called Mac Studio.

Newer Apple devices have longer battery life than older Intel-based devices and have more processing power.

Sales have skyrocketed. Apple’s Mac business grew 23% in fiscal 2021 to more than $35 billion in revenue. inside March quarterMac sales grew more than 14%, faster than any other Apple hardware category. Apple CEO Tim Cook told analysts in April that “the amazing customer response to our M1-powered Macs helped drive revenue up 15% year-over-year despite limitations on sales.” supply”.

That’s not good news for Microsoft.

The majority of Microsoft’s Windows revenue comes from the licenses it sells to Dell, HP, Lenovo and other device manufacturers. That represents 7.5% of Microsoft’s total revenue and nearly 11% of total profit, Morgan Stanley analysts led by Keith Weiss wrote in a note this week.

When Microsoft loses market share, “a lot of price control is lost in the market,” said Brad Brooks, CEO of the cybersecurity startup. Censys and was formerly corporate vice president of Microsoft’s Windows consumer business.

Most revenue from Windows licenses for device manufacturers comes from commercial customers. Brooks says Apple is making big strides in the hearts of consumers, and during his nine years at Microsoft, he has learned that there is a positive correlation between consumer usage and what goes on at Microsoft. Workplace.

“Once they start using a different set of products in their home environment, they’re more likely to adopt that in their professional environment,” Brooks said, of company leaders. , who make technology purchase decisions.

Brooks said he switched to using a Mac as his primary computer in 2017 and says he wants an M2 in the future. All of his company’s approximately 150 employees, he said, use Macs as their primary computers.

Businesses were slow to accept Apple’s M1 computers because of concerns that key applications would not be compatible. But AdobeKitagawa said that Microsoft and other developers have gradually released versions of their original software for these devices.

Patrick Moorhead, CEO of industry research firm Moor Insights and Strategy, says Windows PCs could eventually have battery life and performance comparable to Apple’s latest Macs. Among the chipmakers they use, “it’s now closer between Apple and AMD than between Apple and Intel,” Moorhead said.

However, Apple has other levers to pull as it can offer cheaper computers. Moorhead envisions a MacBook SE that could cost $800 or $900, compared with a starting price of $1,199 for Apple’s upcoming MacBook Air M2. It will be similar to what Apple did with the iPhone SE, a cheap iPhone short some of the company’s latest smartphone innovations.

“A MacBook SE at a much lower price point would break Windows in a pretty big way,” said Moorhead.

Microsoft did not respond to a request for comment.

– CNBC’s Kif Leswing contributed to this report.

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