Newspaper article THE JOURNAL RECORD

Will Macintosh Clones End Up Saving Apple?

Newspaper article THE JOURNAL RECORD

Will Macintosh Clones End Up Saving Apple?

Article excerpt

Sean Anker, chief engineer for Innovative Edit, a video production company based in Indianapolis, recently decided to stay with a technology that many business people have fled: Macintosh computers.

But instead of an Apple machine, he purchased a Macintosh clone from Umax Computer Corp., a tiny start-up company based in Fremont, Calif.

"It absolutely screams in terms of speed," Anker says of his Umax SuperMac S900L model, purchased for about $3,000 -- some $500 less than a comparable Power Macintosh 9500 from Apple Computer would have cost. "And it holds up well for video work and image editing," he said. Anker never even considered a PC running Microsoft Windows, saying that Macintosh-based editing software is far more flexible and easier to use. And he plans to buy a less expensive Umax model for his home soon, and is bullish on the Mac clone industry. "I can see a lot of grassroots excitement building because prices have plummeted," he said. People like Anker are precisely the types Apple had in mind when it began its cloning experiment two years ago after considerable angst and years of internal debate. And the clone experiment is showing signs of success -- though whether it will pay off for Apple itself is still an open question. Price breaks and new choices from clone makers, Apple executives reasoned, would shore up the Mac's reputation among consumers, eventually increasing the overall market share of the Macintosh operating system software. The Mac OS, as the software is known, can use the help, now holding an estimated market share of only about 5.4 percent, compared with 8+ percent in 1995. "We're pleased," Lamar Potts, Apple's vice president for licensing, said of the clone strategy. "Today you've got not only Apple talking up this platform, but a list of licensees contributing to a good foundation for building an industry. There are about 40 different Mac-compatible configurations on the market right now, with only about 10 from Apple." Licensing Mac clones was simply the first, most visible move in Apple's step to overhaul itself after years of fitful financial performance and flagging market share. Apple took another significant step with its recent announcement that it would acquire Steve Jobs' company, Next Software Inc., and with it some critical technologies that should help Apple more rapidly modernize the Mac OS -- a key to effective competition in the long run. As Apple absorbs features from Next products, the changes will be made available to Mac OS system makers as well, said Pieter Hartsook, a former independent analyst who recently became Apple's vice president of marketing analysis and research. "The Next acquisition should mean more competitive systems not just from Apple, but also from the makers of Mac clones," Hartsook said. The ultimate success of Apple's clone strategy could well depend on Hartsook's prediction coming true. This year the handful of licensed Macintosh clone makers will sell 225,000 to 350,000 computers, according to industry analysts. Yet, nearly all of those buyers, like Anker, purchased clones in lieu of Apple's offerings, rather than defecting from machines that run the industry-dominant Microsoft Windows software operating system. So while Apple gets a small royalty for every clone sold, each of those sales is one less computer sold by Apple itself. By some measures, the clone makers have cut into Apple's profits by an estimated $100 million this year -- a significant figure for a company that just returned to profitability after stunning losses in the first two quarters of 1996. "We went into this knowing that there would be some cannibalization" of Apple's market, said Potts, who nonetheless predicted that the clone strategy would pay off in the long run. Many analysts say as much, too. "Without the potential of cloners entering the market, I think Apple would be much worse off," said Kimball Brown, an analyst with Dataquest in San Jose, Calif. …

Search by... Author
Show... All Results Primary Sources Peer-reviewed

Oops!

An unknown error has occurred. Please click the button below to reload the page. If the problem persists, please try again in a little while.