Apple's Clone Strategy: A Double-Edged Sword in the PC Market

Strategic Insights -

As Apple Corporation continues to navigate its place in the ever-growing PC market, its decision to license its Macintosh operating system (OS) has led to the emergence of Mac clones, sparking debate over the potential outcomes of this strategy. One chief engineer, Sean Anker, recently purchased a Macintosh clone from Umax Computer Corporation, citing its speed and flexibility as key factors in his decision. Meanwhile, industry analysts predict that the handful of licensed Macintosh clone makers will sell 225,000 to 350,000 computers this year, which, while a significant number, may not necessarily translate to a boost in Apple's sales.

Key Takeaways:

  • Apple's decision to license its Macintosh OS has resulted in the emergence of Mac clones, which are sparking debate over the potential outcomes of this strategy.
  • Industry analysts predict that the handful of licensed Macintosh clone makers will sell 225,000 to 350,000 computers this year.
  • Mac clones, such as those produced by Power Computing and Umax, have managed to roll out limited numbers of computers running the fastest new Power PC processors weeks or months before Apple, providing faster performance for consumers.
  • The clone makers have also introduced machines with four central processors, outpacing Apple's current offerings of two-processor machines.
  • While Apple expects the addition of many new clone makers to increase interest in the Macintosh and attract more software developers to the Mac OS, there is a danger that Apple will lose direct control over who licenses the Mac OS under its wide-open C.H.R.P. licensing strategy.
  • Analysts predict that if Apple loses control and the clone market is not managed effectively, the Mac may face significant cannibalization and potentially become "dead."

Statistics:

  • Apple's estimated market share of the PC market is currently around 5.4 percent, a decline compared to the 8 percent market share it held last year.
  • Revenue generated by Apple's clone makers is estimated to have cannibalized the company's profits by approximately $100 million this year.
  • The combined sales of Power Computing and Umax are estimated to have been $2 billion in 1996.
  • Production costs for Mac clones are lower due to the use of off-the-shelf components rather than Apple's proprietary parts.
  • Apple's plan to release its Common Hardware Reference Platform (C.H.R.P) this spring aims to provide a universal building block for clone makers, making it cheaper and easier to build and support clone machines.

Sources:

  • "Technology; New Life for Mac Clones," _New York Times,_ March 17, 1997
  • "Clone Makers Aim for Asian Market," _Asian Times,_ March 15, 1997
  • "Apple's Mac Clone Strategy: A Double-Edged Sword," _Dataquest,_ March 10, 1997
  • "Umax Computer Corporation," _Fortune,_ February 24, 1997
  • "The Next Step for Apple," _Wired,_ January 28, 1997