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Power cutting Mac prices

The clone maker is discounting Macintosh models to clear inventory, as it prepares to produce Intel-compatible machines.

Now that it's getting out of the Macintosh business and jumping into the Intel-compatible PC market, Power Computing has cut prices on its main Macintosh computer lines.

Under the terms of a deal struck earlier this week with Apple Computer (AAPL), Power Mac merger has agreed to stop selling computers that run the Macintosh operating system by December 31, 1997. As a result, Power has discounted its current computers to clear them out before year end.

Ironically, Apple executives have said that low clone prices have undercut Apple's own marketing efforts and constitute one of the reasons Apple bought back the licensing rights from Power. Price cuts on systems from the other clone vendors are expected as well, as Apple has said that it will not extend its licensing agreements with those companies.

The PowerBase 240 line of computers have been reduced by $300. The basic desktop configuration PowerBase 240, which uses a 603e PowerPC processor, now sells for $1,299, while the mini-tower configuration starts at $1,399. Basic configurations of both computers include 16MB of RAM, a 2GB EIDE hard drive, 3 PCI slots, a software bundle, and a keyboard and mouse.

In addition, Power has discounted the PowerCenter Pro 240 systems by $100. The PowerCenter Pro comes with a 604e PowerPC processor running at 240 MHz, a 16X CD-ROM, a 2GB hard drive and 32MB of RAM in its base configuration. After the price cuts, the PowerCenter Pro desktop sells for $2,495 while the minitower sells for $2,595.

Power will continue to provide warranty support after its Macintosh license expires, the company said, while Apple will provide OS support.

Although the Power discounts will put price pressure on Apple, the overall effect will be temporary, said Chris LeTocq, an analyst at Dataquest. "There will be general inventory closing-out sales, but you're looking at a subsection of the market," he said. "Apple has some hot hardware," he added.

Discounts are likely from other clone vendors such as Umax Computer and Motorola, LeTocq added, but should have less effect. Both companies had smaller market shares than Power. Apple has yet to agree to give these companies ongoing OS support too.

Apple on Tuesday announced that it would buy various assets of Power Computing for $100 million. Under the deal, Apple obtained Power's Macintosh license and the right to recruit certain Power employees, among other considerations. In return, Power surrendered its rights to make Macintosh clones beginning January 1, 1998. Power in the future will only make computers based on Intel technology.

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