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  • Newsletter Issue #1043

    March 7th, 2023


    The fundamentals aren’t new. Financial results in the tech industry so far in 2023 are mixed, and lots of people, many hired during the height of the COVID-19 pandemic, have received their pink slips. Despite the complaints that Elon Musk’s decision to fire half the staff of Twitter was outrageous, perhaps irrational, Amazon, Google, Meta, Microsoft and others have taken the hint and also announced large layoffs. Not as large as Twitter, but it’s clear they were overstaffed. I mean it’s not that these services are running less efficiently with smaller staffs.

    The layoffs maxed out with Amazon at 18,000. In passing, this total is larger than some of the places I’ve lived in over the years, especially during the early days of my broadcast radio career back in the late 1960s. Two of the towns, Piedmont, Alabama and Windom, Minnesota, had populations below 5,000.

    Imagine the population of an entire town disappearing overnight; well, aside from sci-fi films and TV shows of course. Imagine the equivalent of three or four of those towns.

    That takes us to the company that evidently hasn’t laid off any people, although it may well be that people who leave will probably not be replaced right away.

    Still, the Apple fear-mongers are smelling blood. In its quarterly financials for its fiscal first quarter (also known as the holiday quarter), Apple reported its first revenue decline since 2016. The numbers came in with a revenue of $117.2 billion, down 5 percent year over year, and quarterly earnings per diluted share were $1.88.

    With most any other company, the results would be terrific despite being lower than the previous year. But this is Apple and they must excel despite the headwinds.

    I suppose Apple’s competitors — and their fellow travelers — are salivating now. That larger-than-life company was finally facing the real world. No more “reality distortion fields,” no more illusions of superiority. Or something like that.

    So let’s look at what really happened: Now as you know, Apple assembles much of its product in China. True, they are also manufacturing gear in India and Vietnam and other countries (some of it in the U.S.) But it’s only a relatively small percentage, because it takes years to set up a proper supply chain to handle the tens of thousands of individual components that make up modern tech gear.

    If there’s any blame, it would be to the entire tech industry for choosing China. It was done to exploit cheap labor, and thus increase profit margins. Yes, I suppose customers benefitted too, but few people care so much about where something is assembled so long as it works. And they can afford it, of course.

    Regardless of the reasons and the politics, it’s also true that China has been buffeted by COVID-19. I won’t get involved in the politics of whether the Chinese government was somehow complicit or careless in letting the deadly virus loose upon the world. Clearly that country was not immune, so the government shut everything down. That meant that Apple’s largest assembly partner, Foxconn, couldn’t faction, or if they did, it was at a sharply reduced level.

    This all occurred at the worst time, as Apple was marketing the newest iPhones. If you wanted to acquire an iPhone 14 Pro, the best-selling model, before Christmas, you had to order real early or it would take too long to arrive.

    While I can see where Apple critics would freak, Apple doesn’t built its own iPhones. Tim Cook can’t just call up their manufacturing division and ask for more. By depending on outside suppliers, which helps both pricing and profits, they’ve created a problem for themselves that won’t be easy to resolve. It will take years and billions of dollars to build out assembly and supply chain facilities in other countries. Those who demand that all or most of Apple’s gear should be assembled in the U.S. may gain political points at the expense of logic and reason.

    In any case, while Mac sales were also down, with a dearth of new models to sell, the iPad did surprisingly well. For once. That appears to give the lie to the contention that people aren’t interested in tablets anymore. Just tell that to my wife, who always keeps hers close at hand, every single day. If anything goes wrong, I hear about it right away.

    Now I suppose we’ll be seeing a fair amount of positive news about Macs this year. It all started in January with what I’d call delayed updates to the Mac mini and the MacBook Pro. These were expected in a possible fall 2022 media event, but it never happened. Perhaps it was the result of a delay in sourcing the parts Apple needed to make it so.

    Over the coming year, there are now rumors that the sort of long-in-the-tooth 24-inch iMac will get an M3 update later this year. This could portend a substantial performance increase over the original 2021 version, which had a Plain Jane M1. It would, I think, make sense to offer an M3 Pro option to allow the iMac to rise a step above, say, a MacBook Air.

    There’s also talk of a 15-inch MacBook Air, but I’m not seeing the need with a 16-inch MacBook Pro, except to save a few hundred dollars for a slightly more compact form factor with less performance. But I’m not the marketing genius in the family, so I’ll let it lie there.

    Then there’s the Mac Pro. An Apple executive who described the lineup said it topped out, more or less, with the Mac Studio, which could also use an update since a top-of-the-line Mac mini sometimes speeds past it.

    Apple did previously promise a Mac Pro, but the actual configuration remains a mystery. One rumor had it that the form factor would be similar to the present cheese-grater version with the best possible M-series chip in it, perhaps scaled up from the existing Ultra. But the main potential concern is expandability. Does Apple Silicon support discrete GPUs for higher graphics performance? Or must you depend on whatever Apple can integrate with its system-on-a-chip scheme? What about RAM, which is integrated with the CPU and can’t be replaced?

    Unless there’s some level of expandability for professional users, what would a Mac Pro accomplish compared, say, to a more powerful version of the Mac Studio? Would there even be much of an audience for a computer of this sort for specialized work?

    Apple’s support of the Mac Pro in recent years has been very hit and miss. The 2019 Mac Pro is the very latest, and that represents an eternity in the tech business. Or maybe getting out a new version with Apple’s chips is just taking more time, and that the result will be worthwhile when it arrives. But don’t forget that the most powerful Mac Studio, with the M1 Ultra chip, achieves performance that exceeds many configurations of the Mac Pro right now.

    The online speculators who claim advanced knowledge of what Apple is up to have left a poor impression of what a 2023 Mac Pro would be like. But, again, that’s just speculation. Sometimes it’s right, sometimes it’s partly right, sometimes it’s wrong.

    As for me, I can see the possibilities of a forthcoming 24-inch iMac with an M3 Pro CPU. By giving up three inches in screen real estate, which would seem fairly trivial to me, I could probably save a fair amount of money. Hmmm.


    Gene Steinberg’s Tech Night Owl Newsletter is a weekly information service of Making The Impossible.

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