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Apple changes rules on Mac OS

Customers of the clone vendors will no longer be able to purchase reduced-rate upgrades to the Mac OS.

Apple tightened the screws on Macintosh clone vendors yesterday by discontinuing an offer of software upgrades to customers of clone vendors.

Adding salt to clone vendor's wounds, Apple officially said that upgrades to the latest release of the Mac operating system, called Mac OS 8, would no longer be offered. Apple has been in contentious discussions with clone vendors regarding licensing the newest version of the Mac OS, but has not yet come to terms with any of the companies.

Power Computing, Umax Computer, and Motorola (MOT) may experience more pressure in the protracted licensing talks if sales start slipping because customers are worried that future Mac clones won't have access to the newest versions of the OS.

Apple's upgrade program, Mac OS Up-To-Date, has traditionally worked like this: People who have purchased computers can upgrade to the newest version of the Mac OS if Apple releases a new OS within 30 days of the purchase. Apple sends customers the newer version for $10, instead of the usual $99 retail price.

But yesterday, the company posted information stating that this program no longer applied to clone vendors.

"It's certainly another way to put pressure on the clone vendors," says Kevin Hause, an analyst with International Data Corporation. "It begs more questions about Apple's long-term clone strategy because the clones aren't capitulating easily [in negotiations]," he said.

"The program will honor orders from Mac OS licensee customers who sent in their orders postmarked no later than August 1, 1997. All other orders from Mac OS licensee customers will be returned along with their payment," according to Apple's official Web site. "Customers who purchased a Mac OS compatible system from a Mac OS Licensee should contact the manufacturer for information on how to upgrade to Mac OS 8."

The site notes that customers who bought a qualifying Apple Macintosh system are still eligible for the program.

"We posted that because current clone contracts don't include OS 8. We are honoring current agreements and are still in discussions...Until discussions are finalized, some of these types of programs are on hold," said a spokesperson for Apple.

Offering a glimmer of hope, the spokesperson added that the program could continue when discussions are finalized.

"Clearly that was an important program and we hope that something takes its place," says Bruce Berkoff, director of product marketing for Umax. "We are optimistic and patient" as talks on licensing continue, Berkoff added. Power Computing and Motorola officials couldn't be reached for comment by press time.

Mac OS 8 would allow clone vendors to market systems that are even more competitive against Apple's product offerings. Apple, seeing this, has become more reluctant to license its operating system for fear of losing hardware sales.

The company will probably end up licensing the operating system, but will charge clone vendors even higher fees than the clone vendors had agreed to by July, several independent sources have confirmed. The fees would be based on a sliding scale, in which greater fees (up to several hundred dollars more) are paid for higher performance systems, sources close to Apple have said.

A substantial increase in fees could make the clone business financially unviable and in the long run cause the clone vendors to wither away.

Apple's move to withhold upgrades to Mac OS 8 comes as the company recently decided to hold up certification of new Mac clones because of the unresolved licensing talks, preventing companies like Power Computing from shipping their latest, fastest systems to customers.

Meanwhile, the Mac community continues to buzz with rumors. Industry sources said that the two parties have been in possible buyout negotiations but that no definitive agreement has yet been reached. A deal to purchase back Power Computing's Mac OS license has also been spoken of, but both companies are not commenting on the issues.