Apple’s blowout quarter predicted very accurately by same analyst who predicts ARM-based Macs

“Apple’s stunning iPhone sales in the December quarter took almost everyone by surprise, except for KGI analyst Ming-Chi Kuo,” Mark Hibben writes for Seeking Alpha. “His prediction of 73 million iPhone unit sales seemed outlandish at the time, but even this number was slightly below the reality of 74.47 million.”

“Mr. Kuo apparently has some very reliable contacts in the Apple supply chain. His numbers for iPhone, iPad and Mac unit shipments were about as close as it gets: iPhone: -1.98%; iPad: -0.07%, Mac: 6.28%,” Hibben writes. “Mr. Kuo has been making other outlandish predictions about Apple of late. Perhaps we need to pay attention.”

“I’ve pointed out that Apple has pioneered a fabless, custom-designed system on chip (SOC) business model. I’ve asserted that this is part of a semiconductor manufacturing paradigm shift away from commodity processor manufacturing as exemplified by Intel,” Hibben writes. “Mr. Kuo has also picked up this theme of the paradigm shift in making a prediction that Apple could shift Macs to custom ARM processors in 2016, which has been greeted with some understandable skepticism… Given Kuo’s recent accuracy, we should all give the prediction a little more credence.”

“I believe the arrival of the new higher performance SOCs will help restore iPad sales,” Hibben writes. “Despite numerous rumors of a 12-inch iPad Air Plus, Cook’s comments at the conference call seemed to indicate that there was nothing new on the iPad horizon that would boost sales in the next couple of quarters. Even if we have to wait until next Fall for a new iPad, I believe it will benefit considerably from the new process technology.”

Read more in the full article here.

33 Comments

  1. Maybe we’ll finally start to see iPads entering the same upgrade “cycle” that Macs do. There doesn’t seem to be any real benefit to release a new model once a year during the holiday season. If they want to target education and enterprise, those buying seasons are much different.

    1. Yup agree. We are finally going to replace my wife’s iPad3 which is at least 3 years old. The only reason is that the battery life is beginning to shorten otherwise we would keep it for longer.
      Tim Cook actually provides a lot of meaningful information if you listen closely. For a while now he has been touting the potential of business in China and it was clear his predications were correct. In this call, he states that iPad growth is still there and that the refresh rate is significantly longer than the iPhone. His point is that iPad buyers are a lot of first time users and as a result the user base is increasing. His conclusion is that iPad users will replace their units with new versions of iPad but over a longer period than analysts expect. Over time sales will increase again as replacements are purchased.

      1. I agree with Tim, I think iPad adoption will hit the enterprise significantly within the next two years. The partnership with IBM hasn’t really taken off yet as it’s still in its infancy. Once they can demonstrate what they can produce, it’ll be easy to get other corporations to jump in.

        I also think what’s happening is that people who’ve never had a Mac, but are buying iPads, are moving up to the Mac rather than replace their iPad. The low-end Mac prices are getting awfully close to high end iPads, this might be tempting people to make the jump. With features like Continuity and Handoff, and the compatibility between apps on each platform is making that decision much easier for people to make.

  2. Something is clearly up. No longer having contacts on the inside, I have to rely on instinct. My instinct says if there is an ARM based Mac it will be a lower end machine, far thinner than anyone requires, much lighter than anyone imagined possible.

    It will compete better with ultrabooks and chrome books, and possibly dent the iPad market. I think it’s pretty clear that moving people to touch interfaces will only go so far. The death of the PC was not the correct prediction. The death of the Windows hegemony was. People still need their trucks it seems, even if they’re just smaller trucks.

    In the pro-world, Intel compatibility is still an issue. Many companies still have that one, or two, or three Windows only apps they must use. Parallels and Bootcamp are contributing more to the number of Macs being sold than I think anyone realizes. I even have clients who buy Macs and then run nothing but Windows on them. I try to explain that this is pointless and wasteful, but they’d still rather have Macs. I explain that if you run Windows, you’re not on a Mac. The Mac is OS X, not the hardware. They still believe that somehow running Windows on a Mac makes Windows a better experience. I just had a guy buy an iMac 5K just so it can be set up for bootcamp and running Windows. He has no real intention of ever using OS X.

    So if this analyst is correct, it seems she’s pretty darn smart, compared to most and has the intel to boot, (no pun intended) I bet the new ARM based Macs will be in AIR or AIR like computers.

      1. Um, Xcode and the compiler already do this. I’m sure the full Cocoa stack – appkit and foundation – already run on ARM. But swift and Obj-C both compile to ARM instructions.

    1. I think your analysis is dead on.

      Apple has the capability, incentives and technologies in place to introduce ARM. They will do it to cut their costs, control their own technology, and enable better products.

      I agree the most likely product would be a thinner, lighter, MacBook Air with long battery life, aimed at consumers not business.

      My uninformed guess for ARM is:
      1) Keep upping highly efficient computing power in iPhone/iPad.
      2) Reach desktop performance in a larger iPad Pro.
      3) Increase performance massively with a less power efficient implementation for MacBook Helium.
      4) Work the ARM up the Mac food chain over a decade or more.

      Other vendors are creating ARM based server chips. There is no reason Apple couldn’t beat Intel even on highest end processors if they keep improving their own tech step by step. The only long term advantage Intel has is their fabs, but Apple often has a way of getting more out of components with less tech.

      And for all those who think this would be a disruptive change, Apple has demonstrated it is willing to pull customers into its vision of the future many times.

  3. Making predictions based on sales of existing products, especially when those products receive mega media coverage, isn’t anywhere near as difficult as trying to predict Apple’s next product lineup. Just because Kuo has been accurate with financial predictions does not mean Kuo will be anywhere near the mark with future product predictions.

  4. Ming-Chi Kuo probably reads MDN. He might even post on here. He’s probably an Apple fanboy like the rest of us and mixes that insight with his supply chain sources to create his analyses. That’s the only explanation. Reveal yourself, Ming-Chi.

        1. probably eats at the noodle shops where the tech workers hang out in China (those who can get off campus)

          worker one: “that new Mac is a bitch, it’s so small and they want to put that apple chip in it… ”
          worker 2 ” yeah, boss says they want to ramp up to 3 million when to go into full production .. “.
          worker 3 “all I hope is that get back to the old overtime hours, cutting overtime is a $%#$@# !!!. What are these Gwailo thinking? we need money, wife wants a new car… ”
          Worker one “Go blame China Labour Watch…. “.

          —–
          The first part of the conversation is fantasy speculation. The overtime hours is based on Chinese worker blogs….

        2. Actually it’s much more likely that she has insider information from someone at Foxconn. Foxconn assembles a lot of Apple’s products, so they probably know a “rough” version of the product roadmap, and would know about a lot of hardware features, like Apple ID, and production runs, like iPhones made. I don’t think Ming has leaked much information dealing with OS matters. Which would imply that Foxconn is the most likely source.

    1. The issue of software quality is an objective one. Just because something gets posted and written about a million times over the internet doesn’t mean it’s a bigger or smaller issue than if it was just posted once. People tend to absorb the same information over and over and it becomes perceptually overwhelming.

      Apple’s software quality is the same as it has always been and always will be. The only major issue we’ve seen is the 8.0.1 update to the iPhone 6/Plus, which wasn’t even a software quality issue, it was a distribution issue.

      There are thousands of people having issues with their Macs and iOS devices, that doesn’t mean every issue is affecting every single user. There are and will always be compatibility issues on an individual level that is iMPOSSIBLE for Apple (or any other software developer) to be able to test.

    2. It is not clear to me that it is necessarily a matter of maintaining two versions of OS X. It might be more a matter of maintaining a single OS X code base and compiling for two different processors. Granted, there are other issues – libraries and such. But iOS is effectively OS X lite on ARM, so I believe that Apple can handle a gradual transition of Macs to ARM.

      You would not have Bootcamp on ARM because Windows could not run natively (no Windows RT!). But you can bet that Fusion and Parallels would still be available.

    3. I’m sure they are already maintaining two versions internally. But that this analyst can predicted sales for the quarter doesn’t at all mean she knows what Apple is planning for 2016. The two are quite separate. I’ll Apple doesn’t even known when they will be able to make such a shift. Of course they’re working on it. They’re working on all sorts of things. That doesn’t make them products.

  5. I’m going to make a logical prediction here.

    Mac OSX and iOS are logically separate, but very useful complementary OS’s which many people use each day and often together. But do you really want 2 physical machines.

    What if the MacBook Air NG (Next Gen) could switch between OSX & iOS? Why not?

    An interactive screen would be needed and the screen might optionally flip 180 degrees on top of the keyboard when not just using touch in iOS.

    We already use Spaces, so one Space could be iOS.

    1. That logical prediction sounds similar to Windows 8 ‘metro’ versus ‘classic desktop’ debacle that Microsoft still doesn’t know how to solve.

      It might sound good in theory for a power user, but for normal use the constant switching is a disaster. The constant switching between OS X and iOS would be distancing and cumbersome.

        1. That’s why it would make sense for Apple to partner with IBM and make ‘pro’ style apps that improve the functionality of an iPad pro first, before making an ARM Macbook Air that runs iOS ‘pro’ apps as well, but adding the benefits of the keyboard.

          The rumors already talk about an iPad pro with stylus, and Tim Cook aludes to wanting to co-create at least 100 pro apps with IBM by 2016. Tim says that to improve the role of iOS they have to make iPads work better. Once it becomes possible to do “real” office productivity work on an iPad It doesn’t sound implausable that Apple wouldn’t release an iOS equivalent laptop to run these new apps and benefit with a real keyboard.

          Imagine how long the battery would last on such a Macbook Air, and the A series chips keep improving at an incredible pace. It’s rumored that the Apple watch system on a chip is equivalent to the A5 already. What will the specs of the A10 and A11 be like?

    2. I think the ARM Mac happens after the iPad pro comes out with a force sensitive screen and optional stylus. Then The Apple and IBM partnership create the necessary productivity apps that take advantage of real pen input (including word processors, and others). Once “real” computing applications are able to run on iPads with pen input, an ARM based laptop running iOS becomes desire able because it adds keyboard input to add horsepower to their cars. Apple would still sell MacBook pros for those that need trucks.

      I think a few things point to Apple releasing these tools soon. The first being when Phil Schiller demonstrated drawing circles on that photo in the Yosemite demonstration, (wouldn’t drawing be easier with a stylus) and the fact that Apple’s new photos app hasn’t been released yet. I think the delay is in that the app allows you to edit, crop, mark and touch up photos with a cursor or stylus. And that they have to introduce the stylus before they introduce the app.

    1. You keep saying that, and you have some good points, but as a software engineer who has also done processor design work I think you are wrong.

      At some point Intel is a bottleneck. Obviously Apple can’t (and is not trying to) compete with them at the high wattage end of processor design (yet), but they are advancing the A-series processor faster than Intel is advancing their processors.

      And simply reducing power efficiency (with more cores and higher clock speeds) would improve the speeds of the current A chip.

      Steve Jobs quotes:

      “People who are really serious about software should make their own hardware.” – Steve quoting Alan Kay

      “I’ve always wanted to own and control the primary technology in everything we do.”

      1. We both know the A-series is not, as of yet, fast enough to compete with current Intel chips. But that’s not the point I keep making. The point is the REQUIREMENT of a total rewrite of all current Mac software. The alternative would be to run an emulator (NOT virtualization! Not gonna happen!). So we’d have already slower A-Series chips running current Mac software in emulation. What developer or Mac customer is going to put up with THAT? It’s ridiculous and unnecessary at this time.

        Now if Intel pull a massive boner like IBM did with vaporware portable PPC chips, then we’d have to weigh the situation.

          1. No, not the same thing going 68k to PPC, which is the closest equivalent we’re talking about. We’re back again to talking about CISC vs RISC CPUs. A compiler isn’t going to fill in the holes for you. And there ware lots of holes to fill when moving from CISC to RISC. That’s why Apple used an emulator to fill in the gaps.

            1. The LLVM compiler already will compile both Obj-C (and C) and Swift for both Intel and A-series chips. If you wanted to take binary code that was already compiled for one chip and run it on another, then you would need to emulate or translate in some way. Apple did this to run PPC byte code on intel, and the PPC chips had a motorola 68k emulator built in. But I am talking about re-compiling the code to chip native byte code, which is entirely possible and I’m sure Apple already had OS X running on their own chips.

    2. RISC chips do have a simplicity/size advantage over CISC chips, its just been an overrated advantage. (I designed the ALU of a RISC processor so understand the real but limited benefits of RISC well.)

      Predictions that Intel would lose to RISC failed to take into account that sticking with a well adopted instruction set and using massive profits to keep your fabs years ahead of the competition count for a lot more.

      1. Apple might well still be on RISC chips for Macs if IBM hadn’t screwed up the PPC chip line design. Certainly, being on Intel x86 CPUs is an advantage for Macs right now. Going back to RISC offers NO advantage at this time, even taking into account the apparent death of Moore’s Law over at Intel. (IOW: The extremely slipped schedules for Intel’s current X86 chip lines).

        1. Actually the advantages are many:

          * Cutting the cost of processors to less than half of Intel’s prices.
          * Significantly reducing component costs further, and improving products, by incorporating custom non-processor features onto the same chip as the processor as Apple does with iOS.
          * Useful place to put their overflowing capital to drive margin growth.
          * Speeding up the rate at which Apple can upgrade processors in their products.
          * Control of processor timeline to match product timeline so improved products are released sooner.
          * Ability to strike different power efficiency vs. computing power balance than Intel provides for improved slim notebooks.

          There are obviously disadvantages too, but they are short term and I think Apple will go with taking control of processors over depending on Intel. They have never minded disrupting some customers in their drive to look forward, not backward.

          Their cross platform development tools, new language, and existing dual-OS libraries put them in a good place to begin a transition like this. As does their mounds of cash and already stellar in-house processor design.

          1. A really sleek and simplified $600 MacBook Helium would pull in a lot of new Mac customers. Less doing more.

            As with the first MacBook Air, it might seem underpowered, or the software support gap might seem like a problem to many, but it would soon transition to the new standard in computing for most consumers.

            This would deal a serious blow not just to Intel, but Microsoft too. Apple needs to grow and there are few places it could do so as easily as more vertical integration and Wintel destruction.

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