Apple's U-Turn Draws Mixed Reviews From the Mac Faithful
Apple Computer never just follows the crowd. And with its plan this week to buy its biggest direct competitor, the Silicon Valley company again bucks conventional wisdom.
At a time when most high-tech manufacturers seek to create clusters of partnering companies, Apple is embarking on a unique go-it-alone strategy. This week's controversial move against companies making clones of its computers risks alienating loyal customers and software developers. But if these two groups remain on board, some analysts believe Apple's co-founder and new chairman Steve Jobs has ensured the company's survival.
"He should be congratulated for correcting a mistake," says John Logan, president of the Aberdeen Group, a Boston high-tech market research firm. Facing decline, Apple four years ago offered to license its technology to outside manufacturers in hopes that their "clones" would expand Apple's base.
"That was a nice hope, but by the time Apple decided to support the cloners, it was no longer realistic," Mr. Logan says. The new plan "is not a grow-the-business strategy." But "the base will be supportable for many, many years out."
Other analysts disagree. "Some users - even among those who have continued to buy from Apple - are sure to abandon the platform if licensing is shut down," says Henry Norr, editor emeritus of MacWEEK. Many don't want complete dependence on a single manufacturer.
Apple announced Tuesday it would buy the core assets of Power Computing, the largest cloner of Macintosh machines. Clones mimic all the functions of the original but often cost less. The $100 million deal will give Apple key manufacturing assets and Power Computing personnel so it can begin selling directly to consumers as well as through its traditional dealers.
Apple also said it would not license new technology to other cloners, such as Umax Technologies and Motorola, because they reject Apple's new, higher license fees.
As a result, Motorola said it would delay shipping its acclaimed StarMax Pro 6000 computer, based on the new technology, until the license dispute could be worked out.
The cloners did succeed in growing sales, but mostly at Apple's expense. Mr. Jobs says fewer than 1 percent of Power Computing's sales reached a new audience, while Macintosh sales fell nearly 20 percent in two years.
Early reaction from users was mixed.
"Apple can jack its prices up again because the competition is nonexistent," editorialized Erik Gorka on a Macintosh Web site. "Frankly, when I was rooting for Apple a year ago, this was not what I had in mind."
Other users supported the decision. Cloners "cannibalized the Mac ... marketplace," says John Glasscock, a multimedia content developer in Bloomington, Ind. Last year, he bought a Power Computing clone, but says the machine was so bug-ridden that he returned it and has stayed Apple-loyal ever since.