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What the Clone Decision Means for You

September 15, 1997|Charles Piller

Amid all the angst and hand-wringing about Apple's decision to curtail Mac clones, something has gotten lost: You. What does the implosion of the Mac environment mean for users?

First let me explain what I mean by "implosion." In the last two years, Apple's sales dropped by well over a million Macs a year. Ironically, with the advent of cloning, consumer options dramatically broadened in the same period. (But even if 100% of clone sales were cannibalized from Apple, they amounted to no more than 500,000 units in two years. Clones cost Apple money, but don't blame cloning for the Mac market's decline.)

With Apple's purchase of Power Computing, Motorola's exit in the Mac-cloning business, and reports that IBM will soon end its program to sub-license the Mac OS to other companies, we're going back to the future. Among sizable clone makers only Umax--which Apple will allow to sell Macs, though on an extremely short leash--remains.

Apple's decision to go it alone may help return the company to profitability, a must for the Mac's survival. But at whose expense? Computer-industry precedents suggest that even nominal competition helps consumers. Look at Intel, which enjoys a near-monopoly in the CPU market for Windows computers. With competitive chips, AMD and Cyrix help push Intel's Pentium prices down every quarter. Likewise, competition among Windows computer makers keeps prices low and fuels innovation.

So what does the current Apple strategy mean for consumers?

* Goodbye diversity. Depend on top performance? Apple's sluggish production process and its need to protect the huge volumes in its sales pipeline left it months behind the pace set by the clone makers in rolling out systems based on the fastest new processors. Power Computing and Motorola were ready to launch machines based on the new PowerPC 750 processor that run 30% faster than the fastest Mac on the market, the Power Macintosh 9600/350. Apple's 750-based machines are reportedly still on the drawing board.

Apple has targeted publishing--an industry with an insatiable need for speed--as a key to survival. Bragging rights to the fastest PCs on the market (a recent luxury for Mac OS machines) is a huge selling point when touting Macs over Windows.

And don't forget laptops. Apple's got great, but very pricey offerings. The clone makers would have made a dramatic difference there.

* Goodbye, build-to-order. Will Apple adopt Power Computing's build-to-order system, selling directly to consumers as well as through retail stores? Don't count on it. None of the big PC firms have been able to execute this hybrid model effectively. Apple, with its limited resources and its deadly risk of disrupting main sales channels, faces a daunting challenge.

* Goodbye, low prices. Apple competes against PC makers for new customers at the low end, so along with Umax, it should continue to offer some good deals. But for high-performance models, Apple operates a replacement business. It relies on the loyalty of its faithful user base. The clone makers' price competition on fast machines forced down Apple's profit margins. So without that incentive, expect to pay more for fast Macs in the future.

* Goodbye, vigilant Mac press. The three major Mac publications--Macworld, MacWeek and Mac-User--have merged into a single business, with MacUser absorbed by Macworld. Understand that these magazines were bitter rivals. Their publishers realized that the shrinking Mac advertising market could no longer support two big monthlies. Inevitably, the end of magazine competition means less vigorous reporting and less critical information to inform your buying decisions.

Will the elimination of choice on all these levels let Steve Jobs live up to his messianic image? Or will it hasten the Mac's apparent descent into the purgatory of an irrelevant niche player? We'll know within a year. Until then, it looks to be a rough ride for consumers.

Charles Piller can be reached via e-mail at

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