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Mac clone cuts: No news to Apple

A price war breaks out in the Macintosh market as Power Computing and Umax slash prices across their product lines.

A price war broke out in the Macintosh market today as Mac cloners Power Computing and Umax Computer slashed prices across their product lines, with Power cutting prices as much as 21 percent and Umax 19 percent.

But don't look for Apple Computer (AAPL) to follow suit soon, although a senior Apple official said he welcomes the Mac cloners' price cuts because they can help expand market share for the Macintosh platform.

"This is not news to us because it is a normal behavior in any cloner in any industry," said H.L. Chueng, senior vice president and general manager of Apple's Performa division. "They are acting according to our expectations."

The cloners' price cuts are in part a reaction to Apple's own price cuts of up to 27 percent on February 1, Chueng told CNET.

"In a way, we welcome that because it helps us to enlarge the Macintosh operating system platform in competition to Microsoft-Intel," he said. "If they can take some of the pressure off us and help us grow the platform, it's exactly what we want."

Still, analysts predict that Apple will have to reduce prices on its Mac models, a potential blow at a time when the company is reeling from revenue woes and internal turmoil. But Apple's stock jumped almost ten percent today, closing at 17-7/8, up 1-9/16.

"We've got a price war going on, and it's going to get worse--or better if you're a buyer," said analyst Rob Enderle of Giga Information Systems.

In addition to price cuts, Umax also announced a new low-end Mac clone targeted at consumers and schools with an estimated street price of $1,349 plus a $50 rebate for a limited time. The SuperMac C500/180 is powered by a 180-MHz PowerPC 603e processor and comes with 16MB of memory, an 8X CD-ROM drive, and a 1.2GB hard disk drive.

Power Computing said its PowerBase, PowerCenter, and PowerTower Pro OS systems, as well as prices for some special OS configurations, are on average $600 cheaper to buy today than they were last week. Price reductions range from a $200 cut on the company's low-end PowerBase 180, which now costs $1,295, to its highest-end PowerTower Pro 250 MP, which fell from $5,995 to $4,699, the company said.

"I think it will force Apple to be in the [price] ballpark," said Aaron Goldberg, executive vice president at research firm Computer Intelligence, noting that Power's pricing will be known quickly in the market because it markets directly to buyers. "Clearly there's going to be a short-term dislocation."

Enderle attributed today's reductions in the Macintosh market to price cutting by manufacturers that sell Intel-based PCs, pointing to reductions of up to 17 percent from Compaq and Hewlett-Packard, and up to 14 percent from Dell.

"We're talking major drops across the PC market to try to purge existing inventory," Enderle said. New, cheaper chips expected soon from Intel are forcing Mac marketers to react as well. "You've got a very bad marketing image coming from Apple, putting the entire line at risk. That means that to move product, you have to show a cost advantage."

Goldberg thinks Apple's turnaround efforts may have distracted it from what's happening in the market today. "They're so focused on strategic issues internally that they're not getting tactical field things in place."

An Apple spokesperson could not be reached this morning.

Power Computing price cuts
PowerBase 180
PowerBase 200
PowerBase 240
PowerCenter 150
(1GB drive)
PowerCenter 150
(2GB drive)
PowerCenter 180
PowerTower Pro
200 core
PowerTower Pro
225 core
PowerTower Pro 225
PowerTower Pro 225 MP
PowerTower Pro 250 MP

Umax price cuts
SuperMac S900/200 dual processor
SuperMac S900/180 dual processor
SuperMac S900/225
SuperMac S900/200
SuperMac S900/180
SuperMac J700/180
SuperMac C600/240
SuperMac C600/200
SuperMac C500/180