Power purchase fuels direct drive at Apple
Clone maker?s user base provides starting point for vendor?s initiative to sell low-end Mac products direct over the Web
Apple is making a second attempt at selling direct after acquiring the assets of Power Computing ? its largest clone licensee ? in a deal worth about $100 million.
The vendor is expected to set up a direct sales channel, selling low-end kit over the Web, in October. It will use Power?s established user base as a stepping stone for its direct sales.
A leaked memo from Apple co-founder Steve Jobs to Apple employees claimed: ?Given Power Computing?s position as the largest Mac OS clone manufacturer and its pioneering of direct marketing and sales in the Mac market (a direction we want to move in) we decided it would be best to acquire it.?
US dealers are understood to have been briefed on a plan to introduce Web-based direct sales.
When the manufacturer took over Next Software last year, it also acquired Apple Web Objects, the product used by Dell to build its successful direct sales Web site.
Two months ago, Greg Rhine, Apple?s VP of channel and sales development, told US dealers that Apple was looking for ways to ?become more efficient like Dell?. But a representative of Apple UK denied last week that Apple would ?follow the Dell or Gateway 2000 model?.
Mark McGillivray, a California-based analyst for H&M Consulting, said: ?Apple strongly believes that the channel is costing it money, and it is strongly desired within the company that it goes direct.?
This is the second time that Apple has tried to set up a direct operation. In the UK, the manufacturer set up a direct catalogue initiative, Apple Direct, in November 1993, using Micro Warehouse as its fulfilment centre. But the operation was closed in less than six months.
Tony Halker, CEO of Typetronics, said: ?Macs are only one part of a bigger solution, so it wouldn?t be practical for it to sell direct.?
Another source said: ?Apple doesn?t have the logistics to sell direct, and its R&D costs are so high that it couldn?t afford the investment.?
Rhapsody strikes a sour note
The long-term future of the Mac clone market was thrown into doubt after Apple refused to hand over its next generation operating system, Rhapsody, to its licensing partners.
According to US sources, Power Computing has the rights to include Mac OS 8 until 31 December, at which point its assets are handed over to Apple. Umax claimed it had reached an agreement with Apple to preload Mac OS 8 on systems sold in the Far East.
Apple issued a statement last week, following the acquisition of Power, claiming it had no plans to license any operating system. A leaked internal memo from Apple co-founder Steve Jobs said: ?Our board is convinced that if Apple continues [licensing], the company will never return to profitability, no matter how well Apple performs.?
Steve Kahng, founder of Power Computing, said: ?We believe that in our own small way we have helped to make the Macintosh stronger and that the spirit of Power lives on.?
Jonathan Cole, MD of Computer Warehouse, Power Computing?s sole UK supplier, admitted that the reseller?s right to sell Power Computing?s clones and its own rebadged machines would end.
Sukh Rayat, director at distributor Flashpoint, said: ?The clone market is clearly going to disappear overnight.?