The Six Five team discusses Apple Spooky Event and M3.
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Transcript:
Daniel Newman: talk about the Spooky Scary Event that took place.
Patrick Moorhead: Spooky Scary Event.
Daniel Newman: Scared of the M3, 18 TOPS being the next-gen IPC. All right, well-
Patrick Moorhead: I don’t think we can take it any farther.
Daniel Newman: No, I got nothing.
Patrick Moorhead: No. Listen, Apple scheduled a 30-minute event during an NFL game and during the World Series the day before Halloween. I guess it could have been even worse. It could have been on Halloween, which distinctly indicated to me that this was a complete and total rush job to respond to a couple of things. First of all, was Qualcomm coming out and doing the smack down and showing that these were measured by Qualcomm and not more insight than strategy or Futurum Labs, but they were industry standard benchmarks that they let us watch them perform.
They showed this incredible performance per watt, not just with the 45 TOPS, but also with this incredible CPU that they put in here that, Qualcomm didn’t have the numbers, but showed that it outperformed… sorry, didn’t have M3 numbers, but showed that it outperformed pretty much all of the M2 line. Then Apple’s rush Spooky Event was also a reaction to what Intel is doing where they’re talking about the AI PC where CEO Pat Gelsinger was talking about on earnings calls. They made an announcement about 100 ISV, I saw that, Dan, that would support it and-
Daniel Newman: Okay. Okay, everybody.
Patrick Moorhead: Yeah, they would support that, and then at the Intel Innovation event, Intel talked about it as well. So all these things going on, you’ve got AMD talking about their AI PC. So Apple had to feel some pressure. By the way, folks, according to some industry analysts that are not mine or Dan, Intel units, sorry, Apple units went down 24%. I saw that as not that people don’t like Macs, but they stuffed the channel the quarters before because these analyst reports are about sell in. They are stuff that was sold into the channel, not consumption and sales out. What we saw yesterday was that Mac revenue went down 34%. So you can imagine all the pressures of this, but let me cut to the chase. M3 looks like the same micro architecture as M2 and M1. It is on a potentially improved process, which is the, quote, unquote “3nm TSMC process.” We saw some challenges with the iPhone 15 when it came in with their quote, unquote, “3nm TSMC process-based processor,” that led me to believe that they were having issues because they’re overheating.
Just because they could fix it with a software tweak, it doesn’t mean it wasn’t a chip issue ’cause how often does Apple screw this up? You do thermals and you do software around the certain guardrails of your chips. So hence we have M3 where I expected just a desktop, but we got an iMac plus a MacBook Pro. We did not get errors. When I step back, and I look at what’s going to happen in the industry in the middle of the year, I believe I’ve seen numbers, again, I didn’t run these numbers myself, that Qualcomm, Snapdragon X Elite will outperform at least the M3 Pro version on single-threaded and multi-threaded CPU benchmarks, didn’t run it, just speculating. It appears that the Snapdragon X Elite will have 2 1/2 times the NPU performance as the Apple event. The reason I’m putting so many disclaimers here, folks, is not just that I didn’t run any of these numbers myself, but that there are no independent third-party reviews of any M3-based product.
So net-net, I still think that Qualcomm looks really good mid-year. I think that this is not some M3 that comes in and wipes everybody up again like we saw with M1, and it makes sense, right, Dan? You pointed out the AMD thing that I used to work there and a couple of other things, but here’s what I know. Here’s what I learned over many years. You can’t stretch a microarchitecture too far, three variations, and then you can make it smaller. You can attach them together like Intel has intelligently done. You can go to new packaging, and the competition still has yet to do integrated memory like Apple does that gives it a little bit of an advantage there. But it is getting long in the tooth, okay? I would expect that this Rev4 M4 would have to be a brand new micro architecture. TSMC is slowing down. It’s hard to get the benefits of doing transistor-level architectural shifts. You could throw a bunch of more cash on there, but cash means it’s a bigger chip. Anyways, I’ve gotten so geeky, I just need to stop.
Daniel Newman: You covered my topic well. Thank you.
Patrick Moorhead: Oh, my gosh. Was this your topic first?
Daniel Newman: Who’s counting? But the-
Patrick Moorhead: God, I’m so sorry.
Daniel Newman: No, that’s okay. I paused for a minute and you jumped right in there. So look, I actually will just make a couple of little ads and then we’ll send everybody on their way. First of all, this seemingly was a reaction, and we can speculate, but a reaction to the impressive outputs from the week prior, just based on when it was booked, when it came out, and the fact that it was awkwardly timed. To their credit, I actually wish they would do all their events this quickly. I’ll watch it back.
Patrick Moorhead: 30 minutes.
Daniel Newman: I don’t need two hours. You do it all in 30. Let’s speed it up ’cause for me, I like to consume it in less time. I think your point about microarchitecture is very important. I think that clearly there’s some issue with TSMC and what they’re getting out of the 3nm. It just doesn’t seem generationally like it’s that big of an improvement. To your comments about the Mac numbers, it’s a little scary out there. That’s not good performance.
Patrick Moorhead: What’s scary is a 34% revenue decline.
Daniel Newman: 34%. But to your point, they held stronger when others were doing really bad, so at some point, maybe the theme of this is the music has to stop.
Patrick Moorhead: Yeah.
Daniel Newman: The music has to stop. I think at some point, it’s their time now. They had that eighth quarter of revenue decline or whatever it was, or fourth quarter, I can’t remember what it was. It’s a big difference, by the way, four and eight. But I know it’s a multi-quarter decline, and that is alarming. Having said that, by the way, unrelated to the event, Apple did see 16% growth in services. You do know that the hardware era is going to end, and that is the one part that I wonder if they can get that going. By the way, Pat, 16, I know, not that exciting. Look at you.
Patrick Moorhead: No, no, no, no, no. What do we know now is that the, I don’t know, $20 billion that Google pays Apple is part of that service revenue, if not all of it?
Daniel Newman: It’s a pretty important one, ain’t it?
Patrick Moorhead: No. Isn’t that it came out, so there was a redacted-
Daniel Newman: Yeah, oops.
Patrick Moorhead: But what came out through the Google FTC, I’m like, I’m 80% sure of this, by the way, but I tracked, where else would it show up?
Daniel Newman: Yeah, no, it’s material. It’s material for sure, and so that’s going to be an interesting part of their business to watch. Pat, one big thing too is this, the neural processor doesn’t cut it. It just doesn’t, it’s not going to cut it for what these AI PCs are trying to do longer term. Now, again, Apple might have another announcement in three months, and it might be at 50 TOPS or whatever. But at this spec, it doesn’t seem to be very compelling in that particular arena, which is, it’s going to be important. I guess we’ll see longer term. But I’m not running to a store to buy an M3 If I’m an Apple customer, and I’m not a big… I have an iMac. I’m not seeing generation-to- generation improvements that encourage me to run store to store. But let’s face it, they haven’t been doing that with their phones either. So I guess for people that care about performance, maybe that’s not really where Apple wants to play. Someone said to me the other day, “The people that buy Apple can’t spell Qualcomm.”
So the question mark is always going to be, are they going to be the best marketing company? And they probably are, probably have and probably will be.
Author Information
Daniel is the CEO of The Futurum Group. Living his life at the intersection of people and technology, Daniel works with the world’s largest technology brands exploring Digital Transformation and how it is influencing the enterprise.
From the leading edge of AI to global technology policy, Daniel makes the connections between business, people and tech that are required for companies to benefit most from their technology investments. Daniel is a top 5 globally ranked industry analyst and his ideas are regularly cited or shared in television appearances by CNBC, Bloomberg, Wall Street Journal and hundreds of other sites around the world.
A 7x Best-Selling Author including his most recent book “Human/Machine.” Daniel is also a Forbes and MarketWatch (Dow Jones) contributor.
An MBA and Former Graduate Adjunct Faculty, Daniel is an Austin Texas transplant after 40 years in Chicago. His speaking takes him around the world each year as he shares his vision of the role technology will play in our future.
