My thought process is... that Apple will eventually roll out a two-pronged iMac lineup. It's not because of the Mac Studio or the Studio Display or anything of that ilk. I don't see the larger model iMac as an iMac Pro anymore because I think the Mac Studio covers that market and provides the "Pro" market more flexibility in display options. Unlike consumers that tend to like all-in-one convenience, Pro level use IMHO warrants being able to swap displays out if they fail or move decent displays to more modern machines as you swap out your old desktops/upgrade. I consider it a different set of needs and wants.
What the larger iMac provides is... an option as a larger alternative to the 24" iMac. When the first of the LCD non-lamp-style iMac's was issued it provided a 21" and 24" option. Over time we saw the 21" and 27" options. The higher end iMac did have higher end performance specs... but it also wasn't treated as a much higher model of iMac. Just a better version of the same model. The iMac Pro was a Xeon-level workstation machine with built-in display and used display technology that was near the front of the pack (at the time; in fact... there's still not many 5K display options), at a company that also wasn't still selling separate displays at the time. As such, Apple adding a larger iMac doesn't mean that it's going back on what it said about "only" having one more Mac (model) to deliver. Again... iMac is already an existing product, offering it in a different size to me doesn't require it to be a completely different product in as much as a different spec of the same product. A larger monitor with perhaps a faster standard/optional CPU doesn't make it any less of a machine than what Apple sells currently.
So I don't see the need for an iMac "Pro" variant. The Mac Studio gives you the flexibility of a lower end 27" monitor or the 32" XDR on the higher end based on what you need/want with your machine (or again, numerous third party vendor's displays). It is the xMac that so many wanted for years (though it comes at a time when doing internal upgrades are no longer really a seeming thing with Apple, sadly -- even the inability to pop in an additional SSD to add drive capacity or add RAM has been nixed -- which doesn't sit with the xMac user's desired hopes). It's nice to finally see it, but... again, it is rather limited in what you can do with it beyond accepting that it's pretty much a higher spec, higher feature, taller Mac mini.
My wager is that because of supply chain constraints and the premium costs for some of the components that go into the Studio Display (despite the panel not being bleeding edge there's a lot going on in that case), not to mention limited panel production options for Micro LED and Pro Motion (let alone combined) the Studio Display is sort of a half-assed product by Apple relying on available supply chain components and predicated based on the current market prices. I don't think it was the display Apple "wanted" to make. It was the display that, at the time, they "needed" to make to provide an end-to-end option for the product.
To me, I think they intended on it being much more than that but because of the pandemic it's impacted the practical means to do exactly what Apple intended. They filled the void but did so based on what they could stick in there that was available that was no lower than prior offerings (i.e. it matches the 27" iMac display in all manner except brightness where it improved). That's not a shocker as if you watch some of the YouTube channels that feature Apple prototypes, there's times when Apple has had two competing product plans in the pipeline and had to go for product A over B because as much as B was their desired end goal (which eventually would make it to market later as an evolved product) it was cost-constrained at the time into incapable of being made. I think the nature of the current market has kept the costs of Micro LED panels and OLED panels at significant cost premiums, as did the former tarriff's. IMHO, It feels like Apple slapped the display together to build a product that they needed to fill a need at a specific price-point, despite it likely drawing criticisms for a lot of what it is and does (I'd not be shocked if the next XDR display has the A-series chip like the Studio Display). That A-series chip inevitably would drive the price of the machine up, but so would a move to Micro LED and Pro Motion in the current market too. It would price itself outside of where I think Apple wants the display to be currently.
So with all of that said... I get that the argument could be, "Well, just buy a Mac mini + a Studio Display".
That's still more expensive than the old 27" iMac was in the Apple lineup.
Further, the current Mac mini with it's limited CPU options kind of leaves a significant void in the Apple lineup. You either buy essentially a base processor M1 or you upgrade to a Mac Studio with a M1 Max or Ultra. There's no Mac mini or larger iMac in that gap with a M1 Pro to cover that space; nor is there an M1 Pro Mac Studio at an even cheaper price. As such... you get bare bones performance with an add-on display (either a significantly expensive premium with the Studio Display or you buy a "other brand" monitor) with a Mac mini, or you pay $1,999 for a Mac Studio and $1,200 for a Studio Display. And for those that loved their All-in-ones... it doesn't really remedy that part of it. As a 27" iMac owner... I actually really prefer the idea of an Apple display + Mini or Mac Studio. I mean, I only bought the 27" iMac because there was no Mac Mini plus comparable display for the $ that could beat the 27" iMac on value. I was one that dreamed about xMac's for years on various forums (including this one). But when I look at the pricing and that big gap in the middle... I kind of miss the 27" iMac right now. I've yet to upgrade from my 2012 quad core i7 iMac as a result because I keep waiting to see if Apple fixes that price-point and to see what monitor options pop up (whether Apple or otherwise). Or to see if Apple makes an M2 Pro iMac from 27-32" in size. An M2 Pro 24" wouldn't do it for me.
My guess is... Garmin might be right on this. I don't think Micro LED's are going to come down in price to make a 27" high refresh rate display + the A-series chip & camera (which i consider to be a part of the next XDR lineup) come in at low enough to fill the void of the Studio display. I also am not sold that you pull a $1,300 display from the market... plug a 27-32" 5k iMac with M2 and M2 Pro on the market at that price point without being able to bring the costs down on the display options to make the Mac Studio and smaller XDR 27" monitor as a significant value.
Though, again... that's looking at them as overlapping products when in reality, I kind of feel like the Mac Studio and a larger iMac aren't going to overlap because of different market needs. I'm seriously wanting the Mac Studio and trying to crunch #'s on how to get either a massive amount of screen real estate at 4k resolutions (i.e. dual monitors) or a single larger (32" or a widescreen 34-38") 4-5k resolution display without going over the Apple display on costs. It's not as easy to do as some would have you believe to check all of those boxes. I can do it with 2 4K high refresh rate displays and a dual VESA mount for basically $900... but that's using 2 27" displays. It gets expensive when you move up to 32". I'd honestly rather not spend Apple money on a non-studio 4k/5k display because the industrial design of most every non-Apple monitor is "decent" at best. I mean, if Corsair offered a 32" version of the Xenon in 4k? That might be enough. Even a Viewsonic Elite 4k that wasn't Micro LED might be okay, though it's not on the same level as the Corsair in build.
Now... I can see Apple going with the rumored M2 and M2 Pro for the upcoming mini. That could solve that problem with the price gap some. But IMHO it also means the current Mac Studio Display stays essentially as-is to maintain that price point (and in the end, at $1,200 I'm still considering other options myself despite knowing that nobody builds a monitor remotely like Apple does -- granted Apple could opt to drop the price on it as it'll be even older tech by then; if it got closer to $850-950 it might lure some in). Many already review it and say that it's not a great value for the money (I'd argue that in terms of those that like good industrial design - it's worth a slight premium over the more cheaply made LG that's literally the only comparable display in it's class) and clamor for higher end display technology, despite the fact that the market is very limited on 5k monitors let alone higher end 4k monitors. Viewsonic just released a high refresh rate (Pro Motion) 4k display for gaming with great color correction for Design/Content Creation work and Micro LED technology and...
It's $2,499.
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Not exactly in the same pricepoint that the current Studio Display 27" is selling at. Sure it blows the doors off of it in panel quality despite "only" being a 4k display. I mean, in the Studio Display market pricepoint the best option is either the cheaply built LG 5k display, a bunch of similarly low refresh rate 4k displays with again cheap enclosures, or monitors like Corsair's Xenon 32" which is a beautiful display with higher refresh rate... but it's a 1440p display (2k). It comes with a much nicer build quality but... it's a lower resolution display. And it's not exactly Apple-like in design even with it's pretty elegant industrial design. There's also the 32" Viewsonic Elite... but it's also not a 4k display unless you get the aforementioned Micro LED display at 2x's the price. Contrast, there's also the Alienware 34" QD-OLED. Build is... ehhh... like a lot of Dell's and Alienware's more recent stuff, design is kind of homely IMHO, and... despite an absolutely superior display on color, it's also a 1440p display (though it's widescreen, so it's actually slightly bigger than 2k). It costs roughly the same as the 5k Apple Studio Display.
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So my thought process... you ditch the current pricey low-spec studio, create a higher end Studio Display XDR family with a 27" and 32" model available (if not maybe add a 36-40" panel as well as a 3rd larger option that all add-in the A-series chip and the center-stage camera functionality), and then...
Make a 27-32" iMac with a more standard-fare display (obviously 5k, accurate color to Adobe RGB and other design-level standards; maybe upgrade to a higher refresh rate [120 hz. maybe?] but avoid premium costing parts like super high refresh rates [240-ish] and Micro LED's). Ditch the secondary A-series chip and instead just rely on the machine selling with the M2 and M2 Pro (or M3, M3 Pro) and make it a model upgrade to the 24". Now you have 2 consumer-level all in one machines to fill that void, and you keep the Mac Mini and Mac Studio for those that want more flexibility in display options or that want to pair one with a premium Apple monitor (i.e. the Display XDR's in 27" and 32" and possibly 36-40")
That said... to me Apple making that move is crucially reliant on supply chains and production capacity covering the supply/demand of vendors to Apple at a point where things can be done for reasonable prices. That's the story of computing in general. As time goes on, technology improves but costs a premium... then supply chain growth helps economies of scale making the product come down in price. It's not like that's a Nostradamus-level prediction on my part, it's just common sense.
Apple stuffing an A-series chip into an already expensive 32" "upgraded" XDR display to make it even more insanely expensive is sure to cause problems in the current market. The hope is that the Micro LED Pro Motion display technology at some point will come down in costs enough to pair it with that A-series chip and the better camera technologies at a lower price point (but when it does, we'll probably be up to 8K displays with ever-smaller pixel and/or LED pitches... or be on to some new form of OLED by then) IMHO.
Until you can do that without driving the price tag massively up (i.e. no more than say $200-300 on the retail price; and without altering profit margins per unit which is also key)... I think the current Studio lives as it does and the XDR lineup is a single monitor following the current internal specs but possibly upgrading in some minor areas to retain/gain selling points (i.e. brightness, gamut, etc.). That might preclude the larger iMac from existing, but I do believe it highlights a glaring need for the M2 Pro Mac Mini that's noted in rumors... and it leaves a big opening for 3rd parties to build some nicer monitors at decent price points to eat Apple's lunch on the 27" Studio Display. Or at least, force Apple to drop the price. Which as the older A-series chip in question continues to become cheaper because of supply chain evolution, and the aging 27" 5k panel becomes cheaper, and as Apple considers slashing profit margins a smidge... that to me is inevitable too. If the product can't drastically change to go upward in spec, it needs to come down in costs as time goes on.