Next week, Power Computing will make its second round of price cuts this month (see earlier story), a move that may signal the start of a price war as the two vendors clear out their inventory.
Power Computing will cut prices up to $400 on some high-end systems. For example, a PowerTower Pro 225 with a 225-MHz 604e PowerPC processor and 32MB of memory was priced at $2,595, but will be priced at $2,199 for a system with 96MB of memory. The PowerTower Pro 250 with 128MB of memory will be priced at $3,299. The company had already cut prices on low-end systems by up to $300.
Catalog and retail outlets selling Motorola and Power Computing products are likely to enjoy strong sales through the end of the year as people stock up on new Mac clones.
"In the short term, for us there is a boom in sales because everyone is getting aggressive with pricing...I don't think [Motorola's departure] is good news for the Mac market, but for us, it'll be a sales bonanza. Power might be out of product by October," said Mike McNeil, president of Pacific Business Systems. The company runs Club Mac, a large catalog reseller.
Motorola Computer Group said yesterday it would cease development of its StarMax line of Macintosh-compatible computers. Earlier this month, Apple purchased Power Computing's "key assets"--namely, the Mac OS license--in a stock deal worth $100 million. In return, Power Computing will exit out of the Mac market by December 31 of this year.
Motorola will continue to ship its current systems and an older version of the Mac OS as long as supplies last. Because there is no timetable for Motorola's departure, the company may wait longer than Power Computing before slashing prices.
"By year end we pretty much expect to be done...There may be some price actions required, but we think the market's there," said Dennis Schneider, vice president of Motorola's Computer Products Division. Schneider expects major customers to continue purchasing systems from Motorola because of the service and support the company will continue to offer after inventory runs out.
Motorola customers will have one full year of telephone support and full support of warranties.
People who purchase Power Computing systems shouldn't have much to worry about, either. Apple will provide Mac OS support to Power Computing customers while Power Computing will continue to provide hardware and warranty service to its customers.
"Sales are up. Our only concern is that we have enough supplies to meet the needs of customers. When they're gone, they're gone," said Mike Rosenfelt, director of marketing for Power Computing.
Customers are going to enjoy the deals on Mac systems in the coming months, but remaining Mac system suppliers Umax and Apple will likely lose some sales as a result.
"Umax and Apple are going to hurt in the short term. Some of those deals are going to be hard to pass up. A few people will be scared away, but the majority will get a fast system at a fire sale price. Market-share-wise it may be a bit of a dent in Apple sales, but I think that will be understood," said Devin Comisky, an analyst with market research firm DH Brown.
"Apple can't afford to put a premium on the boxes anymore. If they go back to that, they are going to alienate even more people," Comisky said.