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Some good news for Mac OS

Even as Apple's sales continue to decline, there are indications that the market for the Mac OS is stabilizing, if not growing slightly.

Even as Apple Computer's (AAPL) sales continue to decline, there are indications that the overall market for the Macintosh operating system is stabilizing, and maybe growing slightly, thanks to clone vendors.

According to a recent preliminary report from research firm International Data Corporation, Mac OS shipments increased last year compared to 1995. Although systems based on the Mac OS lost overall market share, the number of total shipments were up.

This is much-welcomed news for Apple, which has suffered a series of setbacks in recent months and is searching for a new direction as it struggles to restore financial well-being.

After having spent $400 million to acquire Next Software last month, Apple chief technology officer Ellen Hancock says the company is now focusing less on hardware and more on the profitable business of software and services. That means that the company is anxious to increase the total market share not just of its own boxes but of all Mac OS licensees.

The new figures indicate that the Mac OS market may in fact continue to grow this year, fueled particularly by the growth of the clone vendors.

Last year, the Mac OS shipped in about 250,000 more systems than in 1995, according to preliminary IDC figures.

At least some of this gain can be attributed to hard-charging Mac clone vendors such as Power Computing. "It's somewhat incremental, but [clone vendors] are rejuvenating the market to an extent," says Tim Bajarin, president of Creative Strategies, a market research firm.

The contribution of the clone market was even more striking in the fourth quarter.

While Apple's 1996 fourth-quarter sales slipped dramatically, shipments of computers based on the Mac OS increased over the previous quarter, according to Apple's preliminary figures that cite total Mac OS shipments.

The increasing importance of clone vendors such as Power Computing, Motorola, and Umax inevitably means that some system sales are stolen from Apple. If Apple is to become healthier financially, it will have to rely less on hardware sales and more on royalties paid for its OS and products such as Web Objects, a development tool for business applications.

The only problem is that Apple still needs its hardware business to transform itself.

"Whether they get to higher [financial] numbers depends on how well Apple is able to position itself for growth," Bajarin said. "If Apple continues to have trouble, it will be hard for the clone market to grow."

Moreover, not everyone believes Apple OS system shipments were up in 1996. Dataquest figures put Apple OS systems shipments at lower levels in 1996 than IDC, showing very slight gains overall and less shipments compared to 1995 if servers are not included.