AI & Technology
Google's Tensor: The Data Company's Data Chip
Ever since the release of the iPhone in 2007, Apple has designed and fabricated its own chips for its own devices. At the time, "owning the supply chain" or the vertical, was the way of controlling the full stack of hardware down to software of the manufacturing and distribution process. Since then, we have seen the practice known as economies of scale, for Apple to make more revenue on each phone sold.
An unrealized benefit at the time is that the creation of a device makers own chips, also allows for unique customization and experimentation of SoC's to differentiate themselves from each other. Other examples include Samsung utilizing its own chips overseas, Microsoft's SQ series chips in the Surface Pro X, Windows ARM offering, and the newest entrance: Google's Tensor chip, which is the focus here. What's important to take away from these examples is the ease of which the manufacturer owns both the hardware and software stack, so in theory, components can become efficient and more intelligent with the entire device. Outside of mobile, we see Apple bringing the same concept to its laptops with the M1 series.
As the focus of this blog turns to all things data, the Tensor chip is the most interesting and dynamic from the aspect of AI and ML on the new Pixel 6 and Pixel 6 Pro devices. This is not a site for phone reviews, so I will not stray into its review, but rather what the Tensor's specifications and future is for Google.
Throughout the pandemic, Google was slow to release innovative instances of its Pixel line. Likely due to chip shortages and creating a SoC from scratch, Google entered the market last month with the Tensor, which is unlike anything else on the market, for better or worse. Since Google, itself, is not a semiconductor company, nor does it utilize fabs, they have chosen Samsung to produce the final product.
Functionality such as improved speech recognition, voice typing, live translate, and magic eraser to remove photobombers from pictures are all based on AI.
ZDNet
As the Tensor based devices offer these differentiations on product use, one of the often-forgotten benefits to a AI/ML blend is the security on the SoC. The Titan M2 component on the die, allows for hardware based security that will ideally stop any attacks aimed at the device itself; i.e. brut-force entrance by bypassing the fingerprint sensor.
Google's first Tensor device will learn from your habits and make suggestions based on usage to save battery, utilize Automatic Speech Processing, and the magic eraser to get rid of those unwanted background intruders on your photos. Out of all of the Pixel's features over the years, the place where the Tensor SoC really shines is its computational photography.
Other cool camera features thanks to Tensor include Magic Eraser, a feature that erases unwanted objects or people from photos. This feature uses Google's ML to do the task of what somebody would need to do on Photoshop, but in an instant.
Tom's Hardware
Rather than optics like a traditional camera, Tensor utilizes it's AI components to fill-in areas that are dull, or even missing. In theory, the machine learning component of the SoC, will allow features like Magic Eraser and Face Unblur to improve over time based on individual usage trends.
Given that this is the first generation Tensor SoC and Google is primarily a data company, this type of component is its core competency. Though Google is famous for deprecating or ending previous products like Google Wave, and Google+, research intensive projects such as SoC design and implementation is not something that can easily be explained away as a "failed software product". Hardware costs much more to develop in any technology company's R&D department.
The rumor mill is already circulating about the next generation Pixel, presumably the Pixel 7, with the next generation Tensor stack. It would make sense given all of the data and usage Google has collected from the first Tensor chips and their usage, and utilize that to improve the AI & ML on future devices.
Disclosure: I own the Pixel 6 and use it as my daily driver.
A Primer on Apple's Q1 2021 Earnings
I won't normally write about quarterly earnings reports from companies. You can get that story from many various sources. For the purposes of this article, I want to discuss why Apple's most recent earnings report was remarkable. I am also not recommending buying or selling Apple stock one way or another.
Yesterday, Apple released an almost perfect Q1 2021 earnings report to Wall Street. Keep in mind this report ended on December 26, 2020, so these numbers do not reflect the post-holiday bump that most consumer electronics companies receive.
Apple's estimates were for a $103 billion in revenue. The actual number was $111.4 billion, the most in the company's history; and the first quarter with over $100 billion in revenues. Earnings per share (EPS) came in at $1.68, well above the $1.40 projections. For an entity as large as Apple, growth of 20% from year over year is absolutely stellar. Apple's market cap is quickly approaching $2 trillion, a modern-day phenomenon.
“These results helped us generate record operating cash flow of $38.8 billion. We also returned over $30 billion to shareholders during the quarter as we maintain our target of reaching a net cash neutral position over time.”
Source: Apple Investor Relations
Apple's total cash on hand for the quarter totaled $195 billion. While still impressive, this was significantly higher before the company ramped up its dividend and share buyback program several years ago.
In the quarter, a perfect storm of new iPhones, Macs, iPads, and services such as Apple TV+ and Apple Fitness+ created conditions for this record revenue.
Apple's iPhone revenue continues to be the bulk of revenue for the company. An estimated $65.6 billion versus estimates of $59.6 billion was earned in the segment. Apple's more streamlined lineup with the iPhone 12 models ranging from the 12 Mini to the 12 Pro Max, offered customers more options while utilizing Apple's sought-after supply chain to maximize margins.
Looking at the Mac, the launch of Apple's new M1 chips for the MacBook Air and the Mini were quite healthy, again, as Apple competes with its former suppliers, creating a more vertical and controlled supply chain capable of full-stack solutions. Owning every component of the process to the hardware and software creates a new experience.
The M1 chip was based off of Apple's A-14 chips that are used in the iPhone and iPad. They are not new to the semiconductor/ARM game. This was an iterative move into the desktop, which paid off as people continue to work from home as a result of COVID and the continuation of work from home situations. Revenue from the Mac division came in just under expectations at over $8.6 billion, however, it is still 21% higher than this time last year.
As the Japanese and Chinese markets move past the worst of their current COVID situations, a bit of a rebound appears to be occurring. It is notable that China itself, is almost responsible for 20% of Apple's quarterly sales.
Greater China sales surged 57% from the year-ago quarter to $21.31 billion, accounting for 19.1% of total sales. Japan sales soared 33.1% year over year to $8.29 billion, accounting for 7.4% of total sales.
Source: NASDAQ
Even what some analysts consider a downside exceeded expectations. Apple's services unit which includes iTunes, the App Store, Apple Music, Apple TV+, and new Fitness+ services came in at $15.8 billion vs. $14.9 billion. During the past several years, Apple has attempted to diversify away from its heavy reliance on iPhone and iPad sales. Thus, it has been building out its services business.
As the iPhone and iPad continues to blow past expectations, Apple seems to have some work to do to get it's built in-user base to utilize some of its services and invent or iterate on new services moving forward. 2021 also surely holds plans for Apple to release new accessories to complement its margins such as AirTags, new M1 products inside the iMac, updated AirPods, and rumored AR/VR devices.