May 14, 1997 7:35 PM PDT

Cloners in Mac OS talks risk delays

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Discussions about licensing the upcoming version of Apple Computer's (AAPL) Mac OS are reaching an important stage, as clone vendors run the risk of having to delay the introduction of new systems until after the biggest selling season of the year.

"The risk of a week gone by gets bigger every day," said Dennis Schneider, vice president and general manager of Motorola Computer Group's, commercial products division.

Delays in licensing the OS could result in Motorola having to delay introduction of products with new 603 and 604 PowerPC chips as well as next-generation G3-family processors, Schneider added. "We have manufacturing capacity and parts suppliers committed to products," he said.

Umax is anxious as well, but sounds a bit more hopeful than Motorola. "It's to our advantage to resolve the issue as soon as possible just to remove questions from users' minds. I'm very optimistic we can do that. Talks are continuing and they are progressing," said Phil Pompa, vice president of marketing for Umax Computer.

Mac OS 8, code-named Tempo, is supposed to be compliant with the PowerPC Reference Platform (PPCP) specification. The new OS along with PPCP-compliant hardware are key technologies that will allow the Mac clone vendors to enhance system performance and introduce new products more rapidly. Schneider says Motorola's PPCP systems could be ready as soon as August if the licensing issue is resolved soon.

"The No. 1 thing that CHRP [Common Hardware Reference Platform, another name for the PPCP spec[ offers Mac-compatible [vendors] is the ability to develop platforms independent of Apple," said Jim Gable, vice president of software marketing at Apple, in an interview last Friday. With Mac OS 7.x software, clone vendors were licensing the hardware and software for their systems, he added. "That ties licensees to Apple projects and vice versa. It's an unrealistic position to sustain for some time."

Current Mac OS 7.x licensees also license hardware designs and in some cases buy motherboards (the guts of a computer system) from Apple. Any changes in hardware design requires changes in the Mac OS to account 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 to the cost of systems and takes extra time.

But while Apple openly acknowledges that the PPCP systems are necessary, they are a major problem because Apple may not be able to keep up with high-tech's fast pace. Apple is worried about the loss of hardware sales, and as a result, the company is trying to make extra money on licensing fees.

"Apple's management team is still working hard on a strategy as far as licensing," Schneider said. And while the two parties are negotiating in good faith and are trying to promote a win-win scenario, "we're in active negotiations but still pretty far apart," he reports.

Umax's Pompa said of the negotiations that the goal is to find the appropriate business model and build a viable business plan. "We also understand we need to have that model work for Apple, with the net result [being] a growth in market share. Apple must also grow market share for us to be successful.

"We need to put together a royalty structure that is competitive with what it takes to put together other systems in the PC marketplace, and...[a] structure that can accommodate changes over time," he added.

Product planning for systems that would use Rhapsody, the next-generation Mac OS, is under way, so part of the negotiations also revolve around Rhapsody. Those talks are more complicated, however, because Apple is licensing client and server versions of the OS for both PowerPC and Intel platforms.

Apple could not be reached for comment on the status of licensing talks.

 

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