Mac Clone Makers Push On Despite Apple’s Core Problems
What do you do when you’re playing follow the leader and the leader stumbles?
Jump to the head of the line, say the companies making clones of Apple Computer Inc.’s Macintosh. While Apple struggles with internal problems, clone makers are forging their own paths with product strategies ranging from unique features to target marketing.
“There are people who have used the Macintosh and loved it for years,” says Bruce Berkoff, director of product marketing for Umax Computer. “The fact that there are other companies out there making Macintoshes gives them a reason to stay with it.”
Umax, the American subsidiary of a large Taiwanese company, has found its niche by selling to Macintosh users in scientific and medical fields--two areas that have received little attention from Apple in recent years.
Overall sales of Macintosh-platform computers are growing, according to Computer Intelligence, a La Jolla-based market researcher. A report released Wednesday by Computer Intelligence found that computers from Apple and Macintosh clone makers made up 11.2% of sales in computer-only retail stores, up from 9.5% in December and 7.8% in November.
In fact, because of the growing demand for clones, Apple is considering an increase in its licensing fees, which are now fairly minimal.
“It’s very likely we’ll see a lot more shipments of [Macintosh-platform computers] this year,” said James Staten, an analyst at Dataquest in San Jose.
The clone makers take credit for keeping the Macintosh alive while its parent is preoccupied with executive shake-ups, impending layoffs and the biggest product transition in its history.
Waiting for Apple to resolve its problems was not an option, says Dennis Schneider, general manager for commercial products at Motorola Inc., which began selling Macintosh clones in November.
Indeed, last year while Motorola was developing its clones, Apple pulled the plug on its long-promised upgrade to the Macintosh operating system, the software that governs the basic workings of a computer.
Motorola had to make a choice: Wait for a decision on a new operating system or move ahead.
In the end, Motorola chose to stay with existing system software--a gamble that paid off. Apple acquired Next Inc., the company started by Apple co-founder Steven Jobs, and Next’s software became the basis for a new operating system. Because the new software won’t be ready until early 1998, Apple has said it will continue to improve the system software that Motorola chose to use.
Motorola has sold about 50,000 computers in less than four months with revenue of more than $1 million, a promising start for its new business.
The Schaumburg, Ill.-based company is looking to the potentially huge market in China, where Apple’s efforts have been weak.
But for companies without the $30 billion in yearly revenue Motorola makes from its other products, risks are greater.
Power Computing was the first company to sell Macintosh clones.
As Apple’s troubles began to mount, the Austin, Texas-based start-up decided to take on Apple directly. Through its direct-mail operations, it began offering lower prices and features not available on Apple Macintoshes.
“Last year, the clone makers played the price game,” says Staten, the Dataquest analyst. “Now Apple is much more price competitive, so the clone companies are trying to offer something that Apple doesn’t have.”
Two-year-old Power Computing had rushed to license Be Inc.’s operating system when rumors were rife that Apple would acquire that company. When Apple’s negotiations with Be collapsed, Power Computing found itself holding a license that many deemed worthless.
But rather than drop Be, Power Computing opted to stick with Be and its state-of-the-art video and audio capabilities that today’s Macintosh lacks.
Recently, Motorola said it too will sell clones using Be’s software.
If Apple proves incapable of recovering from its troubles, does the Macintosh perish, and do the half-dozen clone makers perish with it?
Motorola, which played a key role in developing the Macintosh’s PowerPC microprocessor and has a significant capital investment in the chip, is likely to continue making the machines, keeping the market alive for clone makers.
The alternative is to use the relationships with component suppliers and retailers to move into the already-crowded market for IBM PC-compatibles.
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Send in the Clones
Sales of Macintosh-platform computers, including clones, are growing. Apple Computer Inc. made a majority of the 2 million shipped in the United States last year. Market share for Apple and Mac clones in 1996, by units shipped:
Apple Computer: 86.1%
Power Computing: 8.5
Umax: 3.1
Motorola: 2.2
Note: Numbers do not add up to 100% because of rounding.
Source: Dataquest
Researched by JENNIFER OLDHAM / Los Angeles Times
