Apple CEO Tim Cook (R) looks at 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 WWDC22 annual developer conference22.
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Apple’s new laptops announced Monday, which include the next-generation internal chips from the iPhone maker, could pose new challenges for Microsoft’s lucrative Windows business.
Since Apple began selling Macs with its own-produced M1 processors in late 2020, the company’s computer business has been gaining momentum. Earlier this week, Apple unveiled the M2, which will debut on the new MacBook Air and 13-inch MacBook Pro.
The new chip will include 25% more transistors and 50% more bandwidth than M1.
Mikako Kitagawa, an analyst at technology industry research firm Gartner, said Apple could continue to gain market share with the M2 architecture. In 2021, Apple had 7.9% of PC shipments worldwide by operating system, while Windows controlled 81.8%, according to Gartner estimates. The company expects Apple’s share to advance to 10.7% in 2026, as Windows’s share drops to 80.5%.
Kitagawa said an updated forecast will arrive in the coming weeks that will likely make Apple’s performance look stronger.
Apple’s Mac business has been revived with new devices that carry the company’s own chips as a replacement for Intel processors. The first was the MacBook Air launched last year, followed by updated models of the iMac laptop, Mac Mini and MacBook Pro, and a new model for powerful users called Mac Studio.
Apple’s newer devices have a longer battery life than their older Intel-based counterparts and a lot of processing power.
Sales have increased. Apple’s Mac business grew 23% in fiscal year 2021 to more than $ 35 billion in sales. In the March quarter, Mac sales rose more than 14%, a faster increase than any other category of Apple hardware. Apple CEO Tim Cook told analysts in April that “the incredible customer response to our M1-powered Macs helped drive a 15% year-over-year increase in revenue despite supply constraints.”
This is not great news for Microsoft.
Most of Microsoft’s Windows revenue comes from licenses it sells to Dell, HP, Lenovo, and other device manufacturers. That’s 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, “a lot of price control is lost in the marketplace,” said Brad Brooks, CEO of cybersecurity start-up Censys and former corporate vice president of Microsoft’s Windows consumer business.
Most of the revenue from Windows licenses to device manufacturers comes from commercial customers. Brooks said Apple is advancing among consumers, and during its nine years at Microsoft, it learned that there is a positive correlation between consumer use and what happens at work.
“Once they start using a different set of products in their home environments, they are more likely to adopt that environment in their professional environment,” said Brooks, speaking of corporate leaders making technology purchasing decisions.
Brooks said he switched to a Mac as a mainframe in 2017 and said he would like an M2 machine in the future. All about 150 of his company’s employees use Macs as their main computers, he said.
Businesses were slow to adopt Apple’s M1 computers because of concerns that key applications would not be supported. But Adobe, Microsoft and other developers have gradually come up with native versions of their software for the devices, said Kitagawa, who now expects corporate adoption to grow.
Patrick Moorhead, CEO of industrial research firm Moor Insights and Strategy, said Windows PCs could have battery life and performance that matched Apple’s latest Macs. Among the chip makers they use, “right now it’s closer between Apple and AMD than between Apple and Intel,” Moorhead said.
Apple has other levers to pull, however, as it could offer cheaper computers. Moorhead expects a MacBook SE to cost $ 800 or $ 900, compared to the starting price of $ 1,199 for Apple’s upcoming MacBook Air M2. It would be similar to what Apple has done with the iPhone SE, a cheap iPhone that does not have some of the company’s latest improvements for smartphones.
“A MacBook SE at a much lower price would alter Windows in a pretty big way,” Moorhead said.
Microsoft did not respond to a request for comment.
– CNBC’s Kif Leswing contributed to this report.
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