Apple CEO Tim Cook (R) examines a recently 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’s new laptops, announced Monday that include the iPhone maker’s own next-generation chips, could pose new challenges for Microsoft’s lucrative Windows business.
Since Apple began selling Macs powered by its local M1 processors in late 2020, the company’s computer business has been gaining momentum. Earlier this week, Apple unveiled 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 research firm Gartner, said Apple could continue to gain market share with the M2 architecture. In 2021, Apple held 7.9% of global computer shipments by operating system, while Windows controlled 81.8%, according to Gartner. The company expects Apple’s share to rise to 10.7% in 2026, while Windows’s share drops to 80.5%.
Kitagawa said an updated forecast, which is likely to make Apple’s performance look stronger, is coming in the next few weeks.
Apple’s Mac business has been revived by new devices with the company’s own chips as a replacement for Intel’s processors. The first was the MacBook Air, launched last year, followed by updated models of the iMac, Mac Mini and MacBook Pro laptops and a new model for advanced users called Mac Studio.
Apple’s newer devices have longer battery life than their older Intel-based counterparts and a lot of processing power.
Sales increased. Apple’s Mac business grew 23% in fiscal 2021 to more than $ 35 billion in sales. Mac sales rose more than 14 percent in the March quarter, faster than any other category of Apple hardware. Apple CEO Tim Cook told analysts in April that “the incredible response from customers to our M1 M1s has helped increase revenue by 15% year-over-year despite supply constraints.”
This is not great news for Microsoft.
Most of Microsoft’s revenue from Windows comes from licenses it sells to Dell, HP, Lenovo and other device manufacturers. That amounts to 7.5 percent of Microsoft’s total revenue and nearly 11 percent of gross profit, Morgan Stanley analysts led by Keith Weiss wrote in a note this week.
As Microsoft loses market share, “much of the price control is lost in the market,” said Brad Brooks, CEO of cybersecurity startup Censys and former corporate vice president of Microsoft’s consumer business with Windows.
Most Windows license revenue for device manufacturers comes from commercial customers. Brooks said Apple is making progress among consumers, and he learned during his nine years at Microsoft that there is a positive link between consumer usage and what happens in the workplace.
“Once they start using a different set of products in their home environment, they are more likely to adopt that environment in their professional settings,” Brooks said, referring to corporate leaders who make technology purchasing decisions.
Brooks said he switched to the Mac as the main computer in 2017 and said he would like the M2 in the future. All of his company’s 150 employees use Macs as mainframes, he said.
Businesses are slowly embracing Apple M1 computers for fears that key applications will not be compatible. But Adobe, Microsoft and other developers have gradually come up with natural versions of their device software, said Kitagawa, who now expects corporate adoption to grow.
Patrick Moorhead, chief executive of industrial research firm Moor Insights and Strategy, said Windows computers could eventually have battery life and performance to match Apple’s latest Mac. Among the chipmakers they use, “it’s currently 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 predicts a MacBook SE that could cost $ 800 or $ 900, compared to the starting price of $ 1199 for Apple’s upcoming M2 MacBook Air. It would be similar to what Apple did with the iPhone SE, a budget iPhone that lacks some of the company’s latest smartphone enhancements.
“MacBook SE at a much lower cost would ruin Windows in a pretty big way,” Moorhead said.
Microsoft did not respond to a request for comment.
– Kif Leswing of CNBC contributed to this report.
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