Apple’s newest homegrown chips present a fresh challenge to Microsoft’s Windows business

Apple’s newest homegrown chips present a fresh challenge to Microsoft’s Windows business

Apple’s new laptops, which feature the iPhone maker’s next-generation in-house CPUs and were revealed on Monday. It could offer new challenges to Microsoft’s profitable Windows business.

Apple’s computer industry has been building up steam since it began selling Macs powered by its own M1 processors in late 2020. Apple announced the M2 earlier this week, which will include in the next MacBook Air and 13-inch MacBook Pro.

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

Apple could continue to gain market share with the M2 architecture, according to Mikako Kitagawa. He is an analyst at technology industry research firm Gartner. According to Gartner’s forecasts, Apple will control 7.9% of worldwide PC shipments in 2021, while Windows will control 81.8 percent. According to the business, Apple’s market share will rise to 10.7% in 2026. And Windows’ market share would fall to 80.5 percent with that.

In the coming weeks, Kitagawa expects an updated forecast that will likely make Apple’s performance look better.

Apple’s Mac business has been resurrected by new gadgets that use Apple’s own CPUs instead of Intel processors. The MacBook Air was debuted last year. It followed by updated variants of the iMac, Mac Mini, and MacBook Pro laptops. And also a new Mac Studio model for power users.

Apple’s latest gadgets offer longer battery lives and more computing power than their Intel-based predecessors.

Sales have been on the rise. In fiscal 2021, Apple’s Mac division rose by 23% to over $35 billion in revenue. Mac sales increased by almost 14 percent in the March quarter, outpacing all other Apple product categories. “The extraordinary customer reaction to our M1-powered Macs helped push a 15% year-over-year rise in revenue despite supply challenges,” Apple CEO Tim Cook told analysts in April.

For Microsoft, this isn’t good news.

The majority of Microsoft’s Windows revenue comes from licenses sold to companies like Dell, HP, Lenovo, and others. According to Morgan Stanley analysts lead by Keith Weiss, this represents 7.5 percent of Microsoft’s total sales and over 11 percent of gross profit.

“A lot of pricing power is lost in the marketplace as Microsoft loses market share,” said Brad Brooks. He is the CEO of cybersecurity start-up Censys and former corporate vice president of Microsoft’s Windows consumer division.

Commercial clients account for the majority of revenue from Windows licensing to device makers. Brooks believes Apple is gaining traction with customers. That his nine years at Microsoft taught him that there is a link between consumer behavior and what happens at work.

“Once people start utilizing a particular product set in their personal environments, they’re more inclined to embrace that environment in their professional settings,” Brooks said of business decision-makers.

Brooks stated that he moved to a Mac as his primary computer in 2017. And that he would like to upgrade to an M2 machine in the future. He claims that all of his company’s 150 employees use Macs as their primary PCs.

Because of worries that important apps would not work with Apple’s M1 computers, businesses were sluggish to adopt them. But, according to Kitagawa, Adobe, Microsoft, and other companies have steadily released native versions of their software for the devices. And he expects business usage to increase.

According to Patrick Moorhead, CEO of market research firm Moor Insights and Strategy, Windows PCs could eventually rival Apple’s latest Macs in terms of battery life and performance. “It’s closer right now between Apple and AMD than it is between Apple and Intel,” Moorhead said of the chipmakers they use.

Apple, on the other hand, has other levers to pull, such as offering cheaper machines. In comparison to Apple’s impending M2 MacBook Air, which starts at $1,199, Moorhead envisions a MacBook SE costing $800 or $900. It’d be akin to what Apple did with the iPhone SE, a low-cost iPhone that misses some of the company’s most recent smartphone upgrades.

“A MacBook SE at a lower price range would have a significant impact on Windows,” Moorhead added.

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