The computational revolution
A revolution is dawning upon the computer industry, sparked by the recent success of Apple Inc’s (NASDAQ: AAPL) transitioning from Intel Corp’s (NASDAQ: INTC) chips to self-produced “Apple Silicon” and the launch of their most powerful computer yet; the Mac Studio. Big industry players such as Advanced Micro Devices Inc (NASDAQ: AMD), Intel Corp (NASDAQ: INTC), and even NVIDIA Corp (NASDAQ: NVDA) know that a change is coming and that personal computers need to evolve.
Think about how many components are in a desktop computer and their compatibility issues. If you’re not a tech geek and want to build a reliable PC without paying outrageous prices for a factory prebuild, then you’re in for an adventure. Apart from choosing the components, you then have to wait for separate deliveries, set it up, and hope there isn’t a defaulted component since returning it is another huge waste of time. Plus, all these components waste a considerable amount of material in packaging and production because they’re made individually. Apple Inc (NASDAQ: AAPL) might have found a solution to the growing problem that most of today’s powerful PCs have, which is the increasing power needed to run these computers.
Seeing that the desktop computer industry had almost reached its peak relative to its power consumption and performance, Apple Inc (NASDAQ: AAPL) started developing new processors on a new type of architecture called ARM. In 2020, it launched Apple Silicon, a chip design that allows the creation of faster and more power-efficient Macs than the ones built with Intel Corp (NASDAQ: INTC) designed chips and potentially better than any other computer commercialized nowadays.
On March 18, 2022, Apple Inc (NASDAQ: APPL) released the “Mac studio M1 max”, for a whopping initial price of $2,999, an all-in-one ultra-performance desktop computer that doesn’t consume as much energy as current computers. It has opened the door to a new chapter in the computer industry due to its chip’s density and endless scalability. The price of innovation is always high, but with time and more supply of these computers in the market by different competitors, we could eventually reach an equilibrium in the price far below the current ones. But only time will tell.
To better understand the technology, ARM processors are more efficient since they utilize smaller silicon space and lower power, conserving energy for longer battery life and being more scalable. Also, in contrast to other monopolized processors in the market (x86), ARM processors can be sold to anyone and then developed according to their objectives, bringing on innovation to its finest. This would allow big companies to enter the PC race with their versions of ARM processors, such as Alphabet Inc, Samsung Electronics, HP Inc, Dell Technologies Inc, or even NVIDIA Corp.
Wouldn’t this be positive for the end-user? Theoretically, this would mean more supply for the same demand by creating a more diversified competition, which could positively impact prices and make computers even more accessible than they are today.
It is important to note that the computer industry is filled with movie-like contracts and duopolies made decades ago, impending real innovation. For example, Intel Corp (NASDAQ: INTC) and Advanced Micro Devices Inc (NASDAQ: AMD) have been alone in the processor market thanks to a technology sharing agreement signed in 1984 that forbids sublicensing their x86 processors to any other company and revokes it if any of them change ownership. Qualcomm Inc (NASDAQ: QCOM) has had a monopoly in the computer industry as well due to its exclusivity deals with Microsoft Corp (NASDAQ: MSFT), making them the only supplier of non-Apple Inc (NASDAQ: AAPL) ARM computers.
However, even with this monopoly, companies such as Samsung Electronics (LSE: SMSN) and Alphabet Inc (NASDAQ: GOOGL) have been prompted to start building their processors, opening the way for much more innovation in the space and freeing up the market that up until now has been ruled by industry giants. The time of real innovation in the computer industry is nearing. Think about it, Intel Corp (NASDAQ: INTC) and Advanced Micro Devices Inc (NASDAQ: AMD) are alone in the CPU market, and Advanced Micro Devices Inc (NASDAQ: AMD) and NVIDIA Corp (NASDAQ: NVDA) are alone in the GPU market. There isn’t any other desktop computer manufacturer! Talk about choice, right?
ARM architecture could become much more relevant in the long term as the need for more sustainable and less power-intensive processors keeps growing. This potential future would suck for those who like to get their hands dirty building their custom rig, but the alternative looks much more attractive. The current generation of hardware is already very power demanding, and it’s not like the prices of chips have been low lately with the worldwide supply chain break-down. Also, apart from x86 being created in 1976 and is still used, does it make sense to keep building using x86 architecture and let it stay in the control of Intel Corp or Advanced Micro Devices Inc?
The potential future that ARM architecture offers seems to be one of more diversity, more price competitiveness, and better products. Also, this would help the environment since a change to all-in-one desktop computers would substantially reduce packaging waste and since it’s much more power efficient, reducing energy consumption by worldwide desktop computers. I, for one, look forward to this!