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What are the Advantages of Converging iPad & MacBook Platforms ?

July 2nd, 2013

Macbook running on ARM6 Months ago, there was a strong current of news flowing in the valley that Apple will move away from Intel i5 /i7 processors for Macbook because of the Power Savings ARM Processors offer along with 40% Reduced Cost in using ARM yet maintaining performance without any hindrance. We believe Apple is considering a shift from Intel for its Mac product line for three key reasons

A shared processor platform may allow Apple to better integrate iOS [OS Stack for iphone and iPads] and Mac OS Leveraging the AX [Apple’s own processor] processor used for iOS may offer material cost savings Intel’s product roadmap may not align with Apple’s long-term requirements.

Apple is expected to be a net beneficiary from the cannibalization of laptops by tablets – Apple has a 50-60% tablet market share and a 7-8% laptop market share. The more interesting issue for us is how Apple differentiates the two platforms and justifies a price premium for the MacBook range. The company has, however, said that it sees the iPad and MacBook as distinctly different products and that it does not mind its products being cannibalized as long as its own products are doing the cannibalization.

Will Apple Adopt a More Meaningful Mid Line Approach ?
This approach seems to track the company’s language of iPad and Mac being distinctly different products. It also seems to be the least disruptive option for Apple, simply requiring Apple to converge the interface of shared applications between the two platforms rather than going through the heavy lifting of harmonizing operating systems and or the underlying hardware. The advantage of a hard transition, however, is that Apple could further optimize the Mac user experience with deeper software and hardware integration – iOS has shown the merits of this strategy. Apple could also deepen the integration between the iPad and
Mac lines.

It seems logical for Apple to try and utilize the much higher processing capabilities of the A6X chipset in the iPad with Retina display to lift that product clear of the iPad mini (A5). If Apple does go down this route then it may point to the company launching a high end version of iOS and point the way toward a gradual cannibalization of the Mac by the iPad.

Risks – Implementing this strategy may also prove challenging, as AX processors will likely be able to replicate MacBook Air functionality before MacBook Pro and iMac and long before Mac Pro. While Apple could start by transitioning the MacBook Air range first this would still advertise the fact that MacBook Pro, iMac and Mac Pro platforms will likely also transition in time, potentially portraying them as dead-end solutions. This could impact application development as well as consumer demand.

How Can Apple Beat Windows users ?
If Macs are replaced every 4 to 5 years, then the installed base of Macs is likely around 60m to 70m. Apple sold 90m iPad’s over the last 2 years alone and we forecast 242m in total sales over the next 3 years. If Apple were able to fully unify the user experience between iPads and Macs, then Apple may be able to wean all of these iPad users off of their Windows PCs and onto a Mac.

The consolidation of iOS and Mac OS development under one executive – Craig Federighi – since October 29, 2012 was described by Apple as one of a number of changes that would “increase collaboration across hardware, software and services”. While iOS and Mac OS could clearly remain distinct platforms, under this structure it does also allow for even tighter integration than seen to date.

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