Saving Umax From the Great Clone Kiss-Off

This spring Apple will decide whether to extend the Mac OS license held by the last remaining clone maker, Umax Computer. Given that Apple pulled the plug on the rest of the cloners last year, should you care if this small-volume producer keeps selling Mac compatibles?

Even if you would never buy a Umax machine, the answer should be yes. To understand why, consider the original, simple logic of OS licensing: No single computer company can compete in the long run against an entire industry. Now more than ever, Apple can ill afford to succumb to its animal attraction to isolation.

So why did Apple kill most of its clones last summer? In a meager 2 1/2 years, the clone makers provided an object lesson in competitive efficiency, rebellious innovation and guerrilla marketing reminiscent of Apple's glory days.

Despite Apple's often-sluggish certification process for their designs, the clone makers jumped ahead in key areas. For example, they sped up the cache (high-speed memory linked to the computer's central processor) and system bus (the communications pathway between the CPU and other internal components) to routinely beat Apple's Macs.

They also beat Apple to market with key innovations--including faster PowerPC CPUs--which gave the Mac bragging rights in comparisons with Wintel PCs more than a year before the powerful new G3 machines emerged. Meanwhile, they offered affordable alternatives to Apple's inflated prices.

The clone makers also kept more than a few software developers in the fold. Those developers hoped that in time, clone makers could expand Mac's share of the pie. Alas, this didn't happen. Instead, they mostly cannibalized Apple's market--something the company expected in the short run but was unprepared to weather. Ultimately, acting Chief Executive Steve Jobs deemed clones a distracting profit siphon.

Since then, Apple has marked one profitable quarter and may have another one coming up. Does this suggest that Jobs was right and that Apple should let the Umax license lapse?

Here's why that would be a big mistake: Even absent all clone makers but Umax, Apple's share of the overall PC market continues to drop. And though Umax sales totals are tiny by Apple standards, it fills a few niches in which Apple can't or won't compete. At the high end, a fully loaded Umax S900 is faster than a G3 Mac and offers more RAM capacity and expansion slots. So the most demanding digital video artists and professional publishers--a key Mac constituency--can get what they need without going to Windows NT. And Umax offers the only Mac compatibles for less than $1,000--the fastest-growing market segment and one where Apple is a no-show.

Umax also offers custom solutions for buyers too small for Apple to bother with. For example, each month Umax sells 50 to 100 units designed specially for Tennessee-based Marathon Computing, a company that sells rack-mounted AppleShare servers. Apple's machines are too big for standard racks, so Umax worked with Marathon to create components that fit into standard rack-mountable boxes.

With favorable OS licensing terms, Umax would gladly go after a multitude of Marathon-size companies in a wide range of specialized areas that Apple ignores.

But no matter how many small customers it might save for the Mac, Umax offers a more important benefit to Apple: credibility as a partner. Apple is infamous for pumping up industry partners on one new scheme or another, then dropping the technology before those companies see a return on their investment.

Unlike Power Computing, a former clone maker that Apple bought out last year, Umax has resisted the temptation to brazenly steal Apple's market share. Instead, it made reasonable efforts to expand the Mac market, despite onerous licensing restrictions--for example, the only way Umax can sell G3-based machines is by using an add-on processor card created by Newer Technology.

So if Apple can't work with these guys, who can they work with?

Keeping Umax in the mix won't send the Mac's market share into double digits. But kissing them off could cement Apple's reputation among potential allies as a company to avoid like the plague.

Charles Piller can be reached via e-mail at

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