Motorola will take a charge of approximately $95 million as a result of its decision to stop producing Mac clones, which it attributed to its failure to reach a licensing agreement with Apple Computer for the latest Macintosh operating system, Mac OS 8.
Motorola will continue to ship its current systems and supply its sub-licensees of the Mac OS with hardware designs and also an older version of the Mac OS as long as supply is available. The company said customers of the company's StarMax line of computers will have one full year of current telephone support and committed to full support of warranties.
"In summary, this was a tough decision for all of us, but given Apple's position on licensing, we really had no choice," said Motorola Computer Group general manager Joe Guglielmi in a conference call with the press.
Motorola has been unable to license Mac OS 8 or ship powerful new StarMax 6000 systems because 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.
Apple's management has come to believe that it was giving up more money in lost sales than it could ever make from licensing fees. To restore Apple's financial health, management has so far restricted licensing to just one company--Umax Computer Company.
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.
Today, Motorola's Guglielmi stated publicly that they had reached an agreement which would have given Apple "substantially higher" fees in return for "a much more open and less-controlled market on the Mac OS platform," in reference to the ability to ship CHRP systems.
CHRP, or Common Hardware Reference Platform, was a long-awaited line based on a new architecture that was to use more industry standard parts and allow clone vendors to come up with their own system designs. Apple has decided not to let anyone ship CHRP-based systems, including Umax.
Of Motorola's momentous decision, Guglielmi said that being in the Mac market without rights to OS licensing from Apple did not make for a financially viable business.