Morning Cents: June 23, 2020

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June 23, 2020 – Apple’s new chip, the multi-billion-dollar industry arising from the pandemic and the largest European fraud in recent memory.

Today’s newsletter is 1,265 words, an 8-minute read. Let’s get to it:

Apple Drops Intel for In-House Chips in Major Makeover of Mac Computers

dove into this last night, but the news is too big to ignore today. After a 15-year exclusive partnership with Intel, Apple is going to begin transitioning its Mac computers to using its proprietary ARM chips. 

It’s incredible to see how far things have come. When Steve Jobs first announced the move in 2005, Apple was a fraction of Intel’s size and was a computer-focused firm. Now, the company possesses a market value six times larger than its supplier.

Why it Matters

The transition was inevitable – Apple’s chip technology has been catching up to Intel for years. And by bringing the production in house, Apple can reportedly save $75 to $150 on each chip. It would be more than a billion dollars in savings if Apple were to outfit every Mac sold in a year with the new chip, which could translate back to its customers and shareholders.

The new technology also offers better energy consumption and battery life, faster processing speeds, improved performance and new security features, among other advancements. But the most crucial addition is the integration between devices. Using the same chip opens laptops up to iPhone developers. Apps designed for mobile will seamlessly translate to Macs. iPhone sales have flattened in the last few years, and Apple’s most significant opportunity is to convert sales within its existing customer base. Integration is more valuable than ever.

The rollout will take time. The first Macs with ARM chips will come at the end of this year. The transition, in total, will take two years. But it’s a historic shift for Apple as it takes control of another critical piece of its supply chain.

Numbers to Consider

  • 20 Million – The rough estimate of Macs sold each year.
  • $1.5 Billion – The potential minimum savings Apple would reap if it immediately switched all Macs sold per year to its proprietary chip.
  • 42 Percent – The share of components the company produces itself for the iPhone, up 8 percent from less than five years ago.


A Multibillion-Dollar Opportunity: Virus-Proofing the New Office

With still little understood about Covid-19, companies are scrambling to figure out how to return to the office safely. Remote work has proven to be a useful asset, but many firms need to get back to the physical setting, exploring creative options. In the process, a potential multi-billion-dollar opportunity has arisen – there’s a captive market to protect employees and reduce liability for virus outbreaks following public health guidelines. Here’s a glimpse at what some of the aspects of office life could become:

The Lobby: Entering a building could be me more akin to TSA screenings. Companies who use one specific system, KastleSafeSpaces, may be asked to download an app that will automatically open entrance doors when they come in. Employees will be measured with multiple biometric data points and screened more intensively based on risks.

The Elevators: The era of pressing buttons is probably over. Most users will pre-select their destination and stand in marked, socially distant spaces. NanoTouch, a Virginia-based company, is marketing its self-cleaning, antimicrobial coatings for elevator buttons.

The Office: Rather than packing in desks, companies are now pulling out ones in favor of dividers. Also, employee lockers are growing in popularity as a safe place to stow personal effects and retrieve protective equipment.

Meetings: Instead of formal conference room settings, group meetings could shift to spaced out clusters of couches. The sizes of these gatherings will inherently shrink as well.

Lunch and Coffee: Many on-site corporate cafeterias are likely to disappear. Sodexo has developed an app allowing corporate employees to pre-order and pay for morning coffee and snacks. The same application applies to lunch.

Contact Tracing: In May, PwC introduced a smartphone app that uses Bluetooth, Wi-Fi, GPS and other data to track where employees go around the office. This could inform HR with a map of exposure in the event of an outbreak.

Why it Matters

This isn’t a small industry on the rise. Social distance and contact tracing technology for employers could soon be worth $4 billion annually, according to the International Data Corporation. How the office environment shifts in the next year or two will be interesting to watch, but it’s also important to consider that, as is the case with the virus, its too soon to know how well, or if, any of these measures will work.

Full Story: (NEW YORK TIMES)

Wirecard’s Former CEO Markus Braun Is Arrested

The land beneath Wirecard AG – a German electronic payment firm – is shrinking. Just days after announcing the missing $2.1 billion on its balance sheet “probably doesn’t exist,” the company’s recently departed CEO, Markus Braun, was arrested by German authorities on suspicion of presenting false information. In the interim, Wirecard is working to retain credit lines, cut costs and sell business lines to stay afloat.

Why it Matters

Well, Braun going down is a massive blow for the company, furthering just how bad the situation is. This is probably Europe’s biggest fraud in years. Wirecard was once considered “Germany’s pre-eminent fintech player,” according to The Wall Street Journal. As it turns out, the fictitious $2 billion is likely equivalent to all the net income Wirecard has reported over the last decade.

With its unsavory actions, Wirecard becomes the most prominent digital payment company to crumble. The space is generally very stable, with a rise in online shopping and gambling creating an even bigger pie for companies who hover in the background of billions of transactions.

Braun is accused of “inflating Wirecard AG’s sales volume with fake income,” according to German prosecutors. They allege he was possibly cooperating with perpetrators to make the company appear more attractive to investors and customers. Braun will go before a judge Tuesday.

Numbers to Consider

  • 90 Percent – The sharp decrease Wirecard’s shares have undergone in the last three days.
  • $15.15 – Wirecard’s stock price as of Tuesday morning.
  • $27 billion – The peak value of Wirecard at its height.


Worth Your Time

Effecting Change: On the heels of protests against police brutality, Google employees are banding together, demanding their company stop selling its tech to police departments. And Google is likely to listen. The company has a precedent of dropping contracts based on employee pressures in the past. (LINK – TECH CRUNCH)

A Blow to Foreign Labor: President Trump signed an executive order temporarily halting the H-1B program for highly skilled workers. It’s a massive blow to the tech industry as companies are already complaining about talent shortages. (LINK – TECH CRUNCH)

Conflicting Claims: The Nasdaq is up. The Dow is down. And the S&P 500 is in between. It’s possible surging tech stocks on the Nasdaq explain the whole trend. Still, the disparities between markets heighten the challenges facing investors as they try to make sense of the volatilities. (LINK – WALL STREET JOURNAL)

Back to School: Remote learning will have to end at some point. And just its starting to do in the corporate workplace, social distancing requirements are going to completely change how students learn and interact at school. From what it sounds like, it’ll be almost entirely unrecognizable. (LINK – WALL STREET JOURNAL)

A Couple Cents Content

Read a deeper dive on Apple’s shift to its own proprietary ARM chips (POST)

Digest Austin Hankwitz’s commentary on bold predictions for 2020 (POST)

Power through clips from Justin Oh’s live show last week on whether Square will be our future bank (YouTube) and why we should stay away from Hertz (YouTube)


See you tomorrow!

— Justin Birnbaum

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  1. sick! btw there’s a new Canadian ride sharing company called facedrive that has been making moves.. and they came out with their own tracescan technology for contact tracing.

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