Send Out the Clones

Despite the disbelief I expressed in some of my previous articles about the clone licensing situation, Apple has done what I then thought unlikely – eliminated at least two major players in the clone game. Two weeks ago, Apple purchased Power Computing’s Mac assets, including the company’s Mac OS license. Last week, the Motorola Computer Group announced plans to discontinue its Mac OS clone system business. Motorola will continue to sell its StarMax systems until the end of 1997, after which Motorola will provide warranty and technical support to its customers. Motorola also will provide all existing and new StarMax owners with a full year of telephone support instead of the previous 90 days of support.

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As with Power Computing, the amount of money paid by the clone manufacturers to Apple didn’t seem to be the final sticking point. Motorola was reportedly willing to pay a higher licensing fee to Apple, but according to a Reuters story, "Apple was not willing to give up the designs necessary for cloners to develop systems based on the Common Hardware Reference Platform (CHRP)." I suspect that means Apple wasn’t willing to license a version of the Mac OS for CHRP to Motorola, since UMAX successfully renegotiated a deal with Apple to ship Mac OS 8 with computers that don’t have CHRP motherboard designs.

What About Sub-Licensees? Remember that Motorola also sub-licenses the Mac OS to other companies, including TidBITS sponsor APS. Paul McGraw of APS noted:

Though it appeared to be inevitable considering the present licensing climate at Apple Computer, we find the decision of Motorola Computer Group (MCG) to eliminate its Mac OS compatible computer program to be extremely disappointing. The decision is detrimental to the market as a whole and the businesses of its sub-licensees in particular. We will be forced to make a number of difficult business decisions over the next few months as a result of this decision. At the least, one would have hoped that MCG would have felt it incumbent upon themselves to notify their sub-licensees in advance of a general release to the public. The fact that they chose not to do so seems disappointingly consistent with the extent of their commitment to their sub-licensee partners.

Industry sources say IBM has also decided drop its Mac OS business. Although IBM never manufactured a Macintosh clone (IBM helped design the PowerBook 2400 and was reportedly waiting for Apple to certify CHRP and portable designs before it started producing Macintosh clones), it sub-licensed the Mac OS to Tatung of Taiwan and Akia of Japan. Both Tatung and Akia had designed CHRP-based Macs using IBM’s CHRP designs.

It remains to be seen how these situations will play out, since the existing clone licensing contracts are still in effect. Motorola has not ruled out the possibility of filing a lawsuit against Apple. Sources have said that it cost Motorola $140 million to start its Macintosh clone business, and the company is taking a $95 million charge to discontinue that business – I have to believe that Motorola will attempt to minimize its financial loss. IBM has less of a financial stake, since it never manufactured machines, but the various sub-licensees fall into an awkward position that may confuse the issue for weeks to come. For instance, according to a report on MacInTouch, PowerTools continues to manufacture machines based on Motorola’s motherboards but has also signed an agreement with UMAX for motherboards.

Is the Sky Falling? Needless to say, Apple’s moves (seemingly driven by Steve Jobs) have had some of the negative results predicted in TidBITS-395. A number of Macintosh developers are talking about moving projects to other platforms, and companies are pulling back on Mac-specific advertising and trade shows. Apple’s actions have more subtly damaged its overall business reputation, its relationship with PowerPC suppliers Motorola and IBM, and its standing in the eyes of previously loyal Macintosh users.

The counter-argument being put forth by Apple executives is that Apple was losing too much money to survive. It’s hard to evaluate this claim accurately, since only Apple knows all the numbers. Even if we give Apple the benefit of the doubt, I think there’s no question that Apple and Steve Jobs botched this situation badly. It makes one wonder who, if anyone, is in charge of PR at Apple these days.

The only public information from Apple has been a telephone conversation Jobs had with Ric Ford of MacInTouch. Based on that conversation, Ric believes that Jobs is centering his strategy on the Mac OS and the PowerPC chip. Ric also believes Jobs has a viable plan for expanding the Macintosh market in 1998. I hope Jobs is telling the truth and that his plans succeed. I wish he hadn’t seen the elimination of clone licensing as necessary, since I believe the negatives involved in doing so have overwhelmingly dangerous consequences.

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