Sunday, November 3, 2024

Apple’s game console

New Macs arrive on schedule.
by Mark Gurman

The new Mac mini could become Apple's long-awaited answer to the PlayStation and Xbox. Also: The company's next AI features are planned for early December; it delivers disappointing earnings guidance and agrees to acquire Pixelmator; and Peloton's new CEO is Apple's former services heir apparent.

Last week in Power On: Apple is set to give the Mac its long-awaited M4 chip overhaul.

The Starters

Apple's new M4 Mac mini. Source: Apple

For all its success, Apple Inc. has never really cracked the gaming market — at least when it comes to consoles or computers.

The company's first meaningful attempt was the Pippin, a home game console co-developed in the 1990s — back before Steve Jobs returned to Apple to save it from bankruptcy. It was a commercial flop and pulled from the market after about a year.

Over the subsequent decades, Apple approached the gaming market differently, making it a big part of the App Store, iPhone and iPad. But the company still didn't have much sway over living-room gaming. 

In 2015, it tried to change that. The company revamped the Apple TV set-top box, adding a new App Store with games and software. But the device had a limited amount of processing power and wasn't as entrenched in consumers' lives as the company's other products.

Though the Apple TV box supports third-party game controllers, the device's remote can't be used for racing games or other titles that require motion control or a touchpad. Ultimately, game developers shied away from investing in the platform, and Apple TV never became a true rival to Sony Group Corp.'s PlayStation or Microsoft Corp.'s Xbox. 

Apple made another push when it first unveiled the Vision Pro headset in June of last year. The company touted the device's integration with Apple Arcade — its game subscription service — and the way that the M2 chip could process advanced graphics. The Vision Pro also had support for third-party controllers.

Again, though, game developers didn't really bite. The Vision Pro lacks hand controllers for virtual reality games, undercutting what could have been one of its biggest strengths. And the experience with Apple Arcade games — ported over to the platform — is less than satisfying. That's meant that the Vision Pro is more effective for watching videos or doing some light office work, rather than blasting aliens or zombies.

Now, Apple has another shot. It just released a new Mac mini with M4 and M4 Pro chips — and the company finally has a device that could become a respectable gaming machine. The combination of the Mac's small size and formidable processing power — plus the ability to easily connect it to a living room TV setup — makes it the ideal starting point for a fresh push into the field. 

First, let's start with the chips. At the $599 starting price, the Mac mini sports 10 cores apiece in its central processing unit and graphics engine. That puts it in the same territory as a similarly priced PlayStation 5 or Xbox Series X. If you want to spend more, the $1,399 M4 Pro version beats out the highest-end Mac Pro and Mac Studio models from a couple of years ago. 

Apple also offers a minimum of 16 gigabytes of memory and ray tracing for graphics, adding to the Mac mini's gaming prowess. (When Apple brings ray tracing to the Mac Pro next year — complete with a chip that probably goes up to 32 CPU cores and 80 graphics cores — we'll have one of the most powerful mainstream computer systems the market has ever seen.)

So, from a hardware standpoint, Apple is in good shape. On the software side, the company recently upgraded its Metal graphics software. Combine that with other macOS graphics technologies, a well-integrated App Store, new software for porting games and support for third-party controllers, and you have a near-ideal system.

But Apple's biggest challenge remains a relative lack of gaming titles. Though the company has made some headway in this department — it brought over Hideo Kojima's Death Stranding and recently promised Cyberpunk 2077 — the Mac gaming library still trails those of Sony and Microsoft by miles. 

The hope for both Apple and consumers is that the latest hardware is enough to get game developers to seriously consider bringing more of their best work to the Mac.

The Bench

Apple Intelligence on the iPhone, iPad, and Mac. Source: Apple, Inc.

Apple's next slate of AI features is scheduled to arrive in early December. The iOS 18.2 operating system update, which includes major improvements to Apple Intelligence — like ChatGPT chatbot integration, the Image Playground app and custom emoji known as Genmoji — is likely to arrive on the earlier side of December, I'm told. How early? The week of Dec. 2, barring any unexpected delays. The next major update to Apple Intelligence after that will come in April as part of iOS 18.4 and will include improvements to Siri. It should let the digital assistant tap into people's data and respond to queries based on the information on their screens.

The December iOS 18.2 update will begin offering varieties of English beyond the American version, and the April release will expand to the European Union. For now, pushing into China isn't on the horizon. I'd guess that won't happen until iOS 19 at the earliest. Other future improvements include an integration with Google Gemini. But Apple will probably give OpenAI a nice window of exclusivity, especially since it isn't exactly paying for the technology. So I wouldn't expect the Gemini chatbot to arrive in iOS until next year.

Pixelmator Pro for Mac. Source: Pixelmator

Apple finally and unsurprisingly acquires photo-editing app Pixelmator. About 10 years to the day after the last software update to Aperture — Apple's one-time attempt to take on Photoshop — the company made news by agreeing to acquire Pixelmator. For those unfamiliar, Pixelmator is essentially the modern, high-end photo-editing app that Apple would have created if it had the resources and desire to do so. From the features to the icons to the app interface to the website, Pixelmator has the feel of a company that's already owned by Apple.

Pixelmator has assured users that its products won't change in the near future, but here's my guess for further out: The software becomes something like "Photos Pro" and gets offered as a subscription on the App Store alongside new iPad programs like Final Cut Pro and Logic Pro. That means Apple will once again have both consumer and higher-end iterations of its video, music and photo-editing apps (with Photos, GarageBand and iMovie serving as the free downscale versions). Given Apple's push to boost services revenue, I think you can rule out it giving away Pixelmator features for free in its current Photos app.

Apple's iPhone 16 Pro on sale at a company retail store. Photographer: Victor J. Blue/Bloomberg

Apple disappoints investors with its forecast for holiday sales. The company reported quarterly results this past week, including the first look at how the iPhone 16 is selling so far. The good news for investors is that Apple met its own sales projections and grew about 6% compared with a year earlier. The iPhone did well, coming in ahead of estimates.

But the quarter only included about a week and a half of sales for the iPhone 16. And there were ominous signs, including still-weak demand in China. The Wearables, Home and Accessories division also performed below expectations, despite new watches and AirPods. 

But the bigger concern was Apple's guidance: Revenue in the all-important holiday period will increase by a percentage in the low- to mid-single digits. Wall Street had been targeting 7% on average. So we're unlikely to see the "super cycle" of upgrades foretold by some analysts — an idea I've been pushing back on for months.

Roster Changes

A Peloton store in Palo Alto, California. Photographer: David Paul Morris/Bloomberg

Peloton names a former Apple's services star as its new CEO. The exercise company has spent the past three years trying to rekindle the glory of the early pandemic, when lockdowns fueled demand for bikes and fitness classes. At the time, Peloton management misjudged the situation and assumed they could turn the sales surge into the new normal. The company built too much inventory and — once reality set in — its revenue and stock price plummeted.

The company's most recent leader, Barry McCarthy, tried to turn things around by cutting costs and outsourcing business functions. He also put a bigger focus on subscriptions. That helped move the company in the right direction, but it didn't restore the confidence of investors.

Enter Peter Stern, an Apple and Ford Motor Co. veteran who will be Peloton's next chief executive officer. If anyone could turn Peloton into a successful subscription business once again, it's probably him. 

Stern has been working on in-car subscriptions at Ford. But before that, he was the top deputy to Eddy Cue, Apple's services chief, overseeing TV+ and other offerings. That includes helping run Fitness+ — experience that should come in handy. He's a subscription master who brokered partnerships with carriers like T-Mobile US Inc. and was the driving force behind Apple One subscription bundles. You can expect him to focus heavily on the Peloton app subscription in hopes of rebuilding the business.

Post Game Q&A

(Answers to the below are shown in the subscriber-only version of this newsletter.)

Q: Should I wait for next year's MacBook Pro to upgrade?
Q: How are you liking the Apple Watch Ultra Milanese Loop?
Q: What's the latest you're hearing on the Apple Vision product line?

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