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I wouldn’t be surprised if this started out as an M1 Pro/Max 27” iMac in development, but Apple later changed course since it doesn’t have the thermals for maximum performance (or for the M1 Ultra).
They could've put an M1 Pro or Max in their fine. I have had zero issues with thermals on my 14" MacBook Pro which has a relatively tiny chassis.
 
Seems all a bit over-the-top just for a monitor that can follow your face around and has built in speakers that I'd never use and would get **** on by the big speakers connected to my Mac. I guess that's why they priced it too high for me to bother buying. ??‍♂️
 
Why does it have 2 fans in it!?

Displays generate heat, too - and this one also contains a fairly beefy 96W (?) power supply in order to power a MacBook Pro - more than your typical display would need. Looks like 3/4 of the boards in there are power supply, which they've probably spaced out "horizontally" to distribute heat.

Well, I wish they could fit an M1 Pro in there and give us a 27" iMac.

Heat, again. They'd have needed a M1 Max option to replace the whole range of iMacs - look at the size of the cooler in the Mac Studio.

Also, the M1 Pro - especially the cheaper "binned" version with only 8 CPU cores, that we might have seen in an entry-level 5k iMac, is probably going to be effectively obsolete when the base M2 comes out (with 20%+ faster cores and an extra GU core c.f. the base M1, the 8-core M1 Pro won't have much of a margin) - I wouldn't buy a lower-end M1 Pro machine right now, although the M1 Max should be OK until the M2 Pro/Max (if it's going to come in the same flavours, after the same sort of delay as between the M1 and M1 Pro/Max) appears.

However, I would speculate that the real underlying problem here is the cost of 5k/27" panels.

Since Apple users are the only people interested in 5k, and while economies of scale mean that Apple can use custom panels in MacBook Pros. 5k iMacs sold in significantly lower quantities, so they were buying 27" 5k panels in relatively small quantities => expensive.

If you look at the old entry-level Intel 5k iMacs as roughly equivalent in power to a $1100 Intel i5 Mac Mini, then it felt like you were getting the display (inc. speakers, webcam etc. - not to mention the keyboard and mouse) for well under $1000 - and while I doubt that Apple were taking a loss on those models they probably weren't getting anything like their accustomed markup. If 5k panels are getting more expensive, that could be becoming unaffordable (by Apple standards).

Interestingly, if you look at a top end Intel iMac and specced out a 10 core i9, with 32GB RAM and the better GPU, you ended up spending $3800 which was more than a M1 Max Mac Studio and Studio Display costs today... So its as if the higher-end iMac options were subsidising the high-end display in the base level iMac.

macOS already has support for A series iPad chips.

ISTR Apple dropped A-series support from MacOS like hot garbage the moment the M1 came out, there were always features missing (such as virtualisation and some Rosetta accelerations), and developers only got a few months of useful life out of the DTK (which was all it was ever intended for - a few weeks head start in building ARM versions of Apps so there was a critical mass when the M1 launched).
 
A cool skunkworks project would be to replace the a13 logic board with the m1 minI logic board... essentially Turning it into a 27 inch iMac.
 
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Since Apple users are the only people interested in 5k, and while economies of scale mean that Apple can use custom panels in MacBook Pros. 5k iMacs sold in significantly lower quantities, so they were buying 27" 5k panels in relatively small quantities => expensive.
Maybe I'm wrong here, but I suspect Apple will sell significantly fewer units of the Studio Display than they historically sold of the 27" iMac.

So what will happen to the studio display when the a13 no longer qualifies for iOS updates ?
It will continue to work fine.
 
One of the big questions would be whether it has a Wi-Fi/BT chip in it. If it doesn't it, I can't see it having much a future 'double life'.
 
> It will continue to work fine.

Yes, like all Internet-connected consumer electronics continue to "work fine" years down the road.
The Studio Display isn't an "internet-connected consumer electronics" device in the that sense. It uses iOS to run its functions, but it's not streaming Apple TV+ or uploading photos or surfing the net or anything of that sort. It's just a frickin' monitor.
 
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