Motorola halting Mac development

Motorola is expected to stop development of Macintosh-compatible computers, CNET's NEWS.COM has learned.

The company may be ending development work at the Motorola Computer Group (MCG), which is responsible for the design of Macintosh-compatible systems, according to industry sources.

Certain high-level engineers at Motorola have been told of a pending reduction in operations, according to one industry source familiar with developments.

The report comes as the Motorola Semiconductor Group, a separate division within Motorola that makes PowerPC processors, refocuses its chip efforts in non-PC areas.

But the MCG is in an especially tight fix at the moment since it is unable to license the newest version of the Macintosh operating system (Mac OS) or ship powerful, new StarMax 6000 systems, announced last month at Macworld Boston.

With the ascendance of Steve Jobs, Apple has begun a relentless drive to shut down the Macintosh clone market. Motorola's plight is only the most recent example. Earlier this month, Apple purchased Power Computing's "key assets" in a stock deal worth $100 million. Apple essentially bought back the license to the Mac OS and a list of some 200,000 customers who bought Power Computing's Mac systems. The company that was once the largest Mac clone vendor will no longer sell Mac systems after December 31, 1997.

Along these lines, another source said that Motorola may be using the spectre of exiting the Mac market as a final bargaining chip with Apple in order to cut a deal favorable to Motorola and keep its computer business alive.

Apple's management has taken a vocal stance against licensees who they see as cannilbalizing sales of Power Macintosh systems, and has taken steps to reign in those offenders.

After the purchase of Power Computing, Apple CFO Fred Anderson said, "If we could have a licensing agreement that...grew the base of customers and if it enhanced the shareholder value of Apple, then we would have a positive attitude towards licensees. But through our negotiations with the licensees, we haven't been able to develop an agreement on any program that would meet Apple's objectives."

The clone vendors have been in negotiations with Apple during much of this year over Mac OS 8. Clone vendors were paying Apple for each copy of the Mac OS sold with their systems as well as for use of Apple hardware designs.

Apple, however, has had to rethink releasing Mac OS 8 for CHRP because executives have come to believe that they were giving up more money in lost sales than they could ever make from licensing fees. In order to restore Apple's financial health, management has so far restricted licensing to just one company--Umax Computer Company.