Apple Should License the M1 Chip for Affordable Mac Clones
Back in the dark days of Apple, the almost forgotten mid-1990s, there was a booming business of Mac Clones, licensed, Apple-ish systems running iOS 7 on RISC-based Power PC chips. The quality and designs were decidedly un-Mac-like, but the license business served as a lifesaving revenue bridge between Apple’s stumbling mid-1990s and the return of Steve Jobs.
Jobs killed the licensing business in 1997 and remade the Mac as a translucent and desirable objet d’digital art.
Since then, Apple’s maintained a vicelike grip on the tech and design specs for all Macintosh computers, repositioning them as bespoke, high-end, aspirational computers, systems that often offered less (at least in the way of specs) for more. Apple fans have long been willing to pay premium prices for Apple’s certain special something, but that’s also served to keep Macintoshes in the global market share minority.
2020, however, was an unusual year (I know, understatement) for Mac fortunes. According to IDC, Apple’s Mac business grew by 49.1% in Q4 of 2020. Granted the Mac still sits at just 8% of the global PC shipment market, but that’s up 1.2% from 2019. MacOS has approximately 16% market share.
With working from home and remote learning now a fixture, I’m certain Apple’s desktop business will continue to grow in 2021, and Apple will chip away at Lenovo, HP, and Dell’s formidable market positions.
But there may be another, faster way: Apple silicon.
Apple’s stunning success with its first homegrown desktop silicon since the PowerPC chip (which it built with IBM) is more than just an opportunity to pull its Mac line off the Intel platform.
Built under Apple’s direction by Taiwan Semiconductor Manufacturing Company (TSMC), Apple’s first chip, the M1, blew away even the sunniest expectations. In my latest benchmarks, and running macOS Big Sur 11.2.1, the M1’s Geekbench 5 numbers improved over my original tests and remain significantly higher than those of Intel’s latest tenth-generation Core i CPUs. We’re still waiting for the other shoe to drop on more performant Apple silicon; perhaps an M2 capable of powering iMac Pros and Mac Pros.
With these results, Apple proved it can do this; it can leave Intel behind. What it hasn’t done is show how the Mac brand can grow beyond its premium brand status. To do that, Apple should start licensing Apple silicon, namely the M1 chip to third-party companies.
It’s not as crazy an idea as it sounds. I don’t think the timing could be better.
Even though Microsoft Windows is, by a huge margin, the most popular desktop platform in the world, it’s more or less stagnant. Windows OEM revenue grew by just 1% last quarter and, overall, Windows’ global market share is declining while Chrome OS is growing (Chrome OS jumped 54%, year-over-year, in the last quarter of 2020). The point being people are open to change. They’re not flooding from Windows to Mac because Apple’s computers are more expensive. Chrome systems are usually among the most affordable computers but performance, especially at the low end, can be disappointing.
Apple silicon, however, offers a fresh opportunity for choice in the Mac landscape. All Apple has to do is start licensing the chips to trusted third-party companies, or even develop a new one (a subsidiary or spin-off company) that will follow its design and build guidance and start selling more affordable Macs. I bet Apple could even create a clocked-down version of the M1, maybe call it the “M1a,” to power midrange computers that sell for $499 (or less) but still outperform Chromebook, Intel Core i3 systems, and probably a few eighth-gen Core i5s.
When I shared my idea with longtime Apple analyst (and someone who knew Steve Jobs) Creative Strategies President Tim Bajarin, he threw a bucket of cold water on it.
Via email, he wrote,
I did talk to Jobs about clones and he was completely against that idea. He killed the one’s the prior Apple CEO’s created as soon as he got back to Apple in 1997.
He felt that Apple needed to control their own platforms and drive value through their own software. He would not trust anyone outside of Apple to help Apple achieve that goal.
Moreover, Bajarin believes that, with history as our guide, Apple won’t share the M1 architecture with my imagined clone partners. The architecture “is proprietary and will always be proprietary.”
He may be right but there is one factor here that could tip the scales in favor of sharing or at least finding a way to accelerate Mac market expansion: services.
For all the recent growth Apple has seen in hardware across Macs and iPads, most believe Apple’s future is tied to services. That’s where Apple is innovating with new offerings and bundles, and services revenue growth repeatedly beats incremental growth found in Apple’s other business segments.
Hardware, though does help drive services growth, and one can only imagine what taking Mac (or macOS) market share from 8% to, say 12% or even 20% would do for Apple services revenue. Every Mac clone user would need an iCloud account, many might opt for an Apple One bundle, and all of these systems can run iOS apps, another potential revenue driver. Plus, there’s the obvious benefit of licensing revenue from clone partners and, finally, Apple CEO Tim Cook is not Steve Jobs, and he might make different choices.
Moor Insights & Strategy Principal Analyst Patrick Moorhead, though, echoed Bajarin, telling me via Twitter DM that Apple wouldn’t consider restarting the clone program “for the same reason they pulled away from enabling a clone market before. To Apple, it’s all about the experience, and the Apple experience is about the combination of Apple hardware, software, and services.”
He’s right, Apple enjoys the control, and Bajarin is right, Apple isn’t comfortable sharing its secret sauce. But it’s also hooked on growth and I don’t know how much longer it can accept incremental (or flat) growth in the desktop space when there is so much opportunity.
Bring on the clones, Apple, you know you can do it.