If this doesn't stop Power Computing from complaining about Apple, nothing
will. The companies announced today that Apple Computer was buying the core
assets of Power Computing--until now the biggest Macintosh clone maker--for
$100 million in stock. Power Computing was also the most vocal opponent of
Apple's plan to stop cloning by denying licensing for the MacOS 8.0. Most
news agencies are erroneously reporting that Apple has "purchased" Power
Computing, but this isn't true. In fact, even Apple's own press release
suggests that Apple has purchased the other company. It hasn't.
The deal calls for Apple to acquire Power's customer database, certain
employees, and their existing license to the MacOS. In return, Power
Computing will keep its name and will continue selling Mac-compatible
machines through the end of the year. During the remaining time this year,
the company will switch over to selling Windows-based personal computers.
"Power Computing has pioneered direct marketing and sales in the Macintosh
market," Steve Jobs said in a release, forgetting to note that Apple had
effectively ended that with this deal. "We look forward to learning from
their experience and welcoming their customers back into the Apple family."
Apple has "no plans" to make bids for other clone companies. Additionally,
the company will not release any new computers built by Power.
"Power Computing is gracefully bowing out of the Mac OS business, with some
of our team going to Apple to work for them," said Mike Rosenfelt, a Power
Computing spokesperson. "We thought it was a good way to allow Power
Computing to still have an impact on the Mac market with our engineering
expertise and direct-sales approach."
Power Computing officials say the company is almost ready to release their
first Windows-based notebook computer, which is designed for "visual
computing." The notebook will be aimed at graphics-intensive users who pay
more attention to the application they are working on than the platform on
which it runs, Power Computing said. They're going to have a rough go of
it: The PC market knows little and cares less about Power Computing, who
was a big fish in a small pond when they pushed Mac-compatibles. Now they
will face serious competition from the likes of Dell, Gateway, Compaq, and
others who can easily beat the smaller company's price point. It is
doubtful that the scrappy Power Computing will succeed where electronics
heavyweight Sony has already failed.
In any event, Apple Computer revealed in an afternoon press conference that
Macintosh cloning was effectively ended today when negotiations to extend
agreements with current license holders Motorola Corp., Umax Computer Corp.
and IBM Corp. failed to reach agreement. This means that clone makers will
not be able to buy portables or desktop machines based on the CHRP (once
known as PREP) reference standard, which would have allowed Macs to be built
from industry-standard parts. Furthermore, no Mac cloner will be receive a
license to ship MacOS 8.0 with their machines.
"If we could have a license program that truly expanded user base and
enhanced shareholder value, we would have a positive attitude toward
licensing," Apple CFO Fred Anderson said. "But we have not been able to get
an agreement on any program that would meet those objectives."
According to Anderson, the cloners have signed up almost no new Macintosh
users, meaning that 99% of the people who purchased clone machines were
established Macintosh users buying a new machine. In Apple's eyes, clones
stole customers from Apple while Apple paid all of the R&D expenses.
"Every time a licensee shipped a clone, we were subsidizing that clone with
several hundred dollars," said Apple's Guerrino DeLuca. "That's not
competing; that's subsidizing."
Effective immediately, Apple will only renegotiate licensing deals if the
clone maker agrees to target markets that Apple will not target. Folks, Mac
licensing is over.
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