Marketing analysis: the flea market… Apple’s M1

In June 2020, Apple started a revolution. Finally ! Some will say, for which the firm had cruelly lost its inventiveness or even its vision for a few years already. At WWDC 2020 and a legendary ‘One More Thing’, Tim Cook and his crews unveiled the M1 chip : the beginning of the transition from Intel processors to processors designed by Apple.

A disruption on the market chips and computers, a change of strategy for Apple and a technological breakthrough for the general public. But above all, the new marketing argumentwhich may allow the apple company to regain its former prestige…

The M1 chip: a leap forward, says Apple

The M1 chip is a concentrate of innovation and technology, but above all of experience. Apple has been able to put its expertise and know-how accumulated on the iPhone and iPad processors at the service of this new chip. Built under an ARM architecture, this in-house chip was initially designed for smartphones and tablets. To sum up simply, the ultra-powerful chip of the iPhone and the iPad has been adapted to be integrated within the Mac.

But concretely what is the M1 chip? Before this change, Macs were made up of separate and independent elements:

✅ a CPU (Central Processing Unit), the brain responsible for processing data under an Intel X86 architecture

✅ a GPU the graphics card (Graphics Processing Unit), which manages the images

✅ storage space

Today, the M1 embeds all these components within the same chip. Benefits ? 2.8x faster CPU power and up to 5x faster GPU. But also the integration of a “neural engine” allowing your Mac to automatically learn and anticipate tasks. Concretely, an entry-level Macbook Air M1 is more powerful than a high-end Intel Macbook Pro.

But behind this good technology hides a Marketing strategy complete from Apple. Win back, retain more and more versatile customers, reconnect with innovations that make sense, while reducing its critical dependence on suppliers.

An internalization strategy as well put together as a Mac

In his strategy overall, Apple considers it a priority to be more independent of its suppliers. The Covid crisis, the shortage of components and the numerous product leaks confirm Apple in this choice. By creating its own chips, Apple is slowly moving away from market leader Intel to regain control: its dominant position allowed Intel to regulate processor innovations on the market. Apple was a “slave” to this situation, especially since competitors also sourced from Intel, depriving the Mac of any lever of differentiation. In short, the developments depended on the goodwill of Intel.

The new Apple chip is a processor under ARM architecture, a competitor of Intel. The simple thing to remember is that the business model and sales strategy are different between Intel and ARM. While Intel designs, manufactures, and sells the processor to all computer manufacturers, Arm Holdings, Ltd. owns the design of its chips but does not manufacture anything: it grants licenses to partners who choose the components according to their needs.

Apple is freeing itself from the claws of its suppliers: a reduction in orders by half at Intel has just been announced, causing a 10% loss in market share. Intel is afraid and reacts awkwardly, as its latest campaign shows. communication which outright disparages the new M1 chips.

A redesigned marketing mix around the power of the M1 chip

📦 A product that regains its DNA

On the hardware side, these new chips provide a significant power gain by freeing up space. Consequence: Apple teams can completely redesign the Mac. The latest IMac is the clear proof of this revival: fine and elegant lines, historic colors that recall the change of generation of processors (as for the IMac G3 in 1998) etc. The most impressive thing is the thinness, so much so that the Jack socket (socket for the headphones) had to be integrated on the side and no longer on the rear face, the new thickness of the IMac being too small. The M1 chip allows Apple to put design and power back at the heart of its strategy, which has long made it famous.

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💶 Pricing strategy, Apple’s eternal dilemma

The variable price has even become an argument, a rather rare element at Apple. Today it is possible to obtain for 1149€ a MacBook air M1, just as fast and powerful as a MacBook Pro at 2129€ under Intel. Apple controls the supply chain and no longer suffers the commissions that Intel could impose. The firm at the apple has not really passed on this saving on prices. It is therefore estimated that this choice would have saved him $ 2.5 billion in 2020…

🚚 In distribution, the issue of the transition phase

During WWDC, Tim Cook announced that the transition would take place over two years. By organizing development workshops and the smooth integration of chips into Macs, Tim Cook’s teams build the loyalty of professional and individual customers.

Non-native applications such as Word, Photoshop, VLC for example are historically developed in a particular language which was read by the old architecture. The new architecture, therefore, does not include this language, applications that have not been recoded are therefore logically no longer usable on the new Macs. But Apple overcame this obstacle with panache: thanks to Rosetta, an application translator installed on the M1 Macs, all applications work perfectly. This success facilitates the distribution whether for the consumer but also for application developers. Beyond this aspect, Rosetta once again illustrates the superiority of Apple.

It was first the consumer ranges that were updated without difficulty. Now it remains to take care of the professional machines, which is planned for 2022.

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🗣 Code-changing communication

The M1 processor has become a real selling point and Apple has understood this perfectly. The many campaigns of communication have worked. While at first Apple’s approach was to say that the super-powerful chip of the iPad and the iPhone had been adapted for the Mac, Tim Cook’s teams are now announcing that the super-powerful chip is returning to the market. ‘iPad. Why ? Because the M1 chip has become a differentiation lever : an iPad with an M1 processor sells better, so it would not be surprising if the next generations of iPhones also include this new chip.

Apple is also surfing on environmental concerns as power consumption is very low compared to other chips. It produces very little heat, does not need to be ventilated and provides autonomy up to 20 hours.

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An M1 chip that will quickly burn out?

But Apple is not alone in the market. Qualcomm is also in the process to internalize manufacture of its processors and has just acquired NUVIA, a company founded by former Apple workers who work on the development of high-performance processors. Cristiano Amon, the new CEO of Qualcomm, has officially announced that he is designing chips under ARM architecture to directly compete with the M1 chip.

On the other hand, even if Intel is lagging behind on consumer chips, it retains a significant advantage on professional machines. It is a basic of BtoB marketing, a professional needs a product that meets specific functional or business needs. Problem: Apple’s chip is soldered, not very customizable unlike that of Intel.

Apple must therefore already work on the evolution of its processors for individuals and especially for professionals: M2, M1X … nothing is yet defined. Chip jumps from Apple and its competitors should still move the market!

This article was written and posted on July 16, 2021