Apple (NASDAQ:AAPL) has disrupted several industries over the last decade or so. Most recently, the introduction of the iPad has launched the meme "the death of the PC." If the iPad was right hook to the gut, knocking the wind out of the PC, will a new "MacBook Ether" be the knockout punch?
The MacBook Air, first released in 2008, ushered in the era of ultra light weight laptops. It began as an expensive toy for the executive and airline warrior, but as the price of SSDs (memory based "hard" drives) came down, the Air now represents the entry level laptops in Apple's Mac lineup. Apple's Air pretty much defined the Ultrabook category of computers, several years before the name "Ultrabook" was used.
A computer's CPU is the electronic chip that runs the device. It takes a program or app and runs the instructions that make all the parts of the device function. (Geeks: Please excuse the simplification.) In mobile computing for a smartphone or tablet, one primary concern is the electric current needed to run the CPU. The more compute power you want, the more energy you need. If you want to haul a truckload of bricks up a mountain, you will need a lot more gas than if you are just riding a motorcycle. The more juice your CPU needs, the bigger, and heavier, the battery gets. So, for any given state of technology, there is always a trade off between compute power and the size/weight/cost of the system.
For this reason, most smartphones and tablets run on CPUs based on designs by ARM Holdings, plc (NASDAQ:ARMH). They have designs that they license for chips that sip the juice very sparingly. Thus you can have a smartphone that is as powerful as a 10 year old desktop but weighs under four ounces and lasts for hours.
Still, this is nowhere near the power of a laptop such as a MacBook, be it a Pro or an Air.
Current state of affairs
The MBA grabbed 56 percent of U.S. thin-and-light laptop sales in the first five months of the year, Stephen Baker, an analyst at the NPD Group, told CNET.
Also, for the last several years, the Air has frequently rated number one laptop on Amazon.com (NASDAQ:AMZN).
That is, until very recently. Now the number one spot consistently goes to the Samsung Chromebook, a laptop selling for just $249. (The 13" Air at $1094, is currently #3, right behind a MacBook Pro.) What distinguishes the Samsung (OTC:SSNLF) product, is that it is built on a high end tablet Central Processing Unit [CPU] - their Exynos 5000 Series - instead of a typical, full scaled processor by Intel (NASDAQ:INTC) or Advanced Micro Devices, Inc. (NYSE:AMD). The Exynos is one of the most powerful processors available of the ARM designs.
The key to the Chromebook (this and others of its kind) is that they provide a level of use that is that of a good tablet, but with the form factor of a laptop. They provide a reasonable user experience because they have changed the model of usage. No longer does one rely on running full-blown applications on the computer itself, rather the computer is designed to do two things.
- Serve up web pages, email and similar internet services, and
- Provide access to productivity applications that reside in the cloud, specifically Google Docs.
Apple also uses system chips based on the ARM designs, but they use their own designs, what are called the A-series chips. The iPhone 5 runs their A6 chip, and the latest iPad runs the A6x.
Web site Quartz looked at a couple of recent news items in a post titled How long before Apple ditches Intel in the only segment that counts? First they note:
The first bit of news came from IT industry research firm Gartner on Monday. It predicted that the one category of "PC" in which sales are growing at a reasonable clip is the "ultramobile" notebook computer. That includes Apple's MacBook Air, tablet/notebook hybrids, and some Chromebooks…
They then point to recent news from Digitimes that:
Taiwan Semiconductor Manufacturing Company (TSMC) and its IC design service partner Global UniChip have secured a three-year agreement with Apple to supply foundry services for the next A-series chips built using 20nm, 16nm and 10nm process nodes, according to industry sources.
Digitimes goes on to say:
TSMC will start to manufacture Apple's A8 chips in small volume in July 2013, and substantially ramp up its 20nm production capacity after December, the sources revealed.
And that they will begin producing A9 and A9x processors in the third quarter of next year.
Quartz puts this together to suggest that Apple will replace the Intel processors in MacBook Air. With new faster chips, Apple could produce the Air with their own A-series.
Beg to differ
But I do not see this happening. The MacBook Air is solidly positioned as Apple's entry level, full scale laptop. For every jump in A-series performance, Intel will do the same with their line. No, Apple will not do this to the Air.
They will do it to a new line - I hypothesize it will be the MacBook Ether. Like the Chromebooks, it will be basically designed to be an internet appliance, running low-key apps locally, and productivity applications in the cloud.
Steve Jobs always said that Apple was not interested in the netbook format because they provided an unsatisfactory user experience. But now times have changed.
Apple can indeed build serious new laptops based on its ARM-based A-series CPUs that will provide a quality experience. Doing so, it will finally enter the low cost computing world, opening up a whole new market.
In a follow up article, I will discuss the economics of such a move, and its new weapon to secure that market.
Related Article: Ultraflops?.
Disclosure: I am long AAPL. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.