Apple's MacBook Pro Event: The Hidden Bullish Factors
$Apple(AAPL.US$ On the day that Apple unveiled its new set of MacBook Pro devices, shares of the Cupertino-based company jumped from a modest gain of 0.2% earlier in the morning to 1.2% at the closing bell. The obvious reasons for such an intraday spike are not hard to pinpoint: Apple introduced two new chips that, from a processing and graphics performance standpoint, promise to leave the competition in the dust.
But I believe that there are more subtle reasons why Apple investors may have felt particularly bullish on October 18 – and that, maybe, could fuel the rally further as the market slowly prices in the upside potential.
The talk of the town lately has been how the pandemic, more specifically the global economies' messy recovery from it, has been causing disruption to the supply chains. The tech space has been hit particularly hard by the crisis, as component shortages alone have caused some hardware vendors to expect a drop of more than ten percentage points in annual revenue growth this year.
Confronted with the sector-wide challenges, Apple impressed by "flexing its supply chain muscles" during the October product launch event. Ahead of it, I found it plausible that the highly-anticipated new set of MacBook Pro laptops would face production delays. The risk would be even higher, in my view, if Apple boldly introduced not only a new 16-inch device but also rushed to bring to market a 14-inch trim to replace last year's 13-inch model during such a turbulent environment for tech device makers.
In the end, Apple handily topped all my expectations. The 14.2-inch product was, in fact, launched on the same day as its 16.2-inch counterpart. Not only that, but Apple did not retire the 13-inch model, which effectively expanded (and added complexity to) Apple's PC portfolio. Lastly, but perhaps most impressively, all new products, which were fundamentally redesigned to accommodate the new M1 Pro and Max chips, will start shipping as early as next week – well ahead of the thick of the 2021 holiday shopping season.
Apple has reinforced my opinion that the company is, indeed, the king of inventory management. Former COO Tim Cook, a methodical operations manager at heart who has once advocated for "managing [tech inventory] like you're in the dairy business", has proven his value once again as the chief executive. Whether last year's transition from Intel-based (INTC) gear to Apple silicon played a key role or not, I believe that this was the perfect time for Apple to showcase what it is capable of doing within its supply chain, given concerns around the world that are unlikely to be put to rest anytime soon.
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Nick_TradingVersion : AAPL is now doing to the laptop world what it has previously done to the mobile world: sucking the margins out of the space. The new M1 Pro and M1 Max simply blow away the x86 competition by every metric except price, which means that the only way x86 laptop vendors will compete going forward is now purely on price.
In other words, AAPL has just reduced the laptop market to another commodity market, except for AAPL, which alone retains pricing and margin power.
Next year expect them to do the same to the desktop/workstation space as they complete the Mac's 2-year transition to Apple Silicon.
And I doubt if they'll stop there. Remember, these are first-generation Apple Silicon products. Within another generation or two at the most, the x86 datacenter market will be ripe for plucking.
Yogesh SuvaOP Nick_TradingVersion: "sucking the margins out of the space"
Never going to happen in the mobile PC space. Many high end PC laptops are the new/latest high end gaming platform. Apple doesn't do gaming.
This new system will be limited.
lichenaday Yogesh SuvaOP: Not as limited as you think. And yes, there are quite a few games that do play on Macs... reasonably competitively.
That said, I do own a PC, almost exclusively for gaming as not ALL games play on a Mac, nor do all photo manipulation apps run on Mac. However, I do use my Mac for everything BUT those PC-specific apps.
Nick_TradingVersion Yogesh SuvaOP: Name a game that "won't run on Mac" and I think you'll be surprised how many of those already have or soon will have Mac versions to stay competitive.
Yogesh SuvaOP Nick_TradingVersion: "Name a game that "won't run on Mac"
https://www.techradar.com/news/best-pc-games
Are you arguing all these game titles are going to magically be recompiled and optimized for Big Sur? Or that they run in parallels? And when you say "run" do you mean load and make it to the interactive part? Or do you mean actually have a worthy playable (60fps) type experience without glitches, stutters or unintended exits?
Nick_TradingVersion Yogesh SuvaOP: I don't quite think you realize how effortlessly fluid these Apple Silicon machines really are, even when running purely on battery power. Not to mention silent. Watch for the benchmarks and reviews to start pouring in over the next few weeks.
Yogesh SuvaOP Nick_TradingVersion: Appreciate your opinion, but you didn't really rise to defend your challenge. I'll just leave it there.
lichenaday Yogesh SuvaOP: I would note that I have played several games on my older iMac that were perfectly competitive, even through Steam, where there wasn't a truly Mac-native version. The big factor really was that the developers didn't want to compile their game code over to a smaller (in numbers) platform when Windows on Intel carried most of their revenue. Now with the changeover to Apple silicon, such a recompile would be easier and cheaper than two different versions of Intel code and yes, it would by 60fps or better without glitches, stutters or unintended exits (something of which I see far more on my purpose-built PC than I ever did on my Macs with the same games.)