Meanwhile, Apple will allow Power Computing to ship computers with OS 8 through the end of the year, after which time Power Computing will exit the Mac market.
This afternoon, Umax formally announced that it is authorized to sell Mac-compatible computers with OS 8 in all international and U.S. market segments through July of 1998. The company will pay increased fees to license the OS, but officials declined to provide further details, as NEWS.COM reported this morning.
Apple will also include Umax's U.S. customers in its Mac OS Up-to-Date program. The program allows people who have purchased computers to 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. Power Computing customers will be allowed to participate in the program.
Apple had suspended the program due to the lack of a licensing agreement with the Mac clone vendors.
"We needed to resolve [these issues] for our customer base, so we came to terms to get this past us," says Phil Pompa, vice president of marketing for Umax. The agreement was reached in principle last week, as NEWS.COM reported last Friday , while details of the agreement were hammered out over the weekend, Pompa said.
The new short-term agreement does not include Rhapsody, which is the next-generation operating system that Apple is hoping to introduce by mid-1998. "Rhapsody [negotiations are] still completely open. We will be talking to [Apple] about that," Pompa said.
The agreement also does not grant Umax the ability to ship systems based on the new CHRP (Common Hardware Reference Platform) architecture, which would enable clone vendors to ship systems even more competitive with Apple's offerings. Motorola, the only vendor that has announced a CHRP system, is still unable to release its StarMax 6000 computer because Apple will not certify the system. Motorola also has not reached an agreement with Apple on the licensing issue.
The agreement further highlights Apple's shift in licensing strategy from one where licensing was being openly encouraged to one where the clone companies are being directed to avoid competing head-to-head with Apple.
Apple purchased the "key assets" of Power Computing, the largest Mac clone maker, in a stock deal worth $100 million last week, forcibly preventing Power Computing from selling any Macintosh-compatible systems after December 31, 1997. Apple Computer says the deal was made because Power Computing didn't expand the market for the Mac OS as was originally hoped the licensees would do.
Executives at Apple have explained the shift by saying that the company has been losing money and market share as a result of the licensing program, which wasn't in full swing until 1996. Because Mac clone vendors weren't expanding the market for Mac systems, Apple said last week it would not extend its current licensing agreements to cover Macintosh operating system 8.0, the new version of the OS, or any other technology unless the terms could be reworked to the financial advantage of Apple.
"We were subsidizing [each clone computer] with several hundred dollars," said Guerrino De Luca, the executive vice president at Apple who is involved in the licensing project.
Umax does have a strong presence in the Asian markets and is expected to continue to expand its Macintosh sales efforts abroad. But in the U.S. market, it is not yet apparent how the Umax deal will expand the Mac market since the company is not restricted from selling systems to customers in Apple's core markets of education and desktop publishing.
Bruce Berkoff, director of product marketing for Umax, said of the licensing deal, "This is, in some ways, our reward for being a good citizen." Berkoff says Umax has been expanding the Mac platform by selling systems through smaller VARs (value-added resellers) and retailers where Apple doesn't have a strong presence, even though the machines may serve the same kinds of users. The company has also worked to sell less expensive systems and offers models below the $1,000 price point, where Apple has no offerings.
Apple officials could not be reached for comment.