April 9, 1997 5:00 PM PDT

Apple, IBM in OS talks

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Apple (AAPL) and IBM (IBM) are reportedly discussing new licensing fees for Apple's Macintosh operating system.

Apple recently notified IBM that it intended to raise the fees as much as tenfold for high-performance systems. The proposed arrangement is causing concern at IBM, according to a report in the New York Times. IBM does not currently sell its own Mac clones but does sublicense the operating system to companies such as Taiwan-based Tatung and Akia, a Japanese computer manufacturer.

Apple has publicly stated that the release of Mac OS 8.0 is the reason for the renegotiation and possible increase in software licensing fees. After the release, clone vendors will no longer have to buy hardware platforms from Apple.

Currently Mac OS licensees also have to license hardware designs and in some cases buy motherboards (the guts of a computer system) from Apple. Each new hardware design requires a special version of the Mac OS that accounts for the presence of different chips on the main system board. Apple then has to certify that these systems work properly by running computers through an elaborate series of tests. The process of design and certification adds expense to systems that has been passed on through the OS and hardware licensing fee.

Major differences in the CHRP-compliant Mac OS 8.0 include a new level of independence between the hardware and OS. This is achieved with adherence to an open standard for system design called the PowerPC Reference Platform. (PPCP). With CHRP, clone vendors will be able to come up with their own designs that don't need Apple's certification for compatibility, which could result in a greater variety of Mac systems.

Apple declined to comment specifically on talks with IBM, but has previously acknowledged that licensing arrangements are being discussed. "Apple continues to see licensees playing a prominent role in the growth of the Macintosh market. It is in our interest to help create an environment where both Apple and Mac licensees are growing and profitable," a company spokesperson said.

Apple also is having second thoughts about licensing the Mac operating system at all, the Times report said. To counteract the loss of sales to clone makers, Apple might raise the licensing fee to more than $500 for the more profitable, more expensive machines which use the fastest PowerPC processors. These machines are sold both by IBM and Motorola.

Slower machines would have a lower fee, pushing clone makers into the low-margin portion of the Macintosh market. The report says that a rift has developed which could cause IBM to pull out of the Macintosh market.

However, one industry insider says that IBM is simply becoming vocal about its involvement in the Mac market. The growth of clone vendors and their eager adoption of the fastest and latest PowerPC processors has helped spur processor sales and revenue growth. IBM is interested in making sure the market for its own processors continues to grow, according to the source.

 

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