Apple buys Mac clone maker

SAN JOSE, Calif. Apple Computer Inc. is buying Macintosh clone maker Power Computing Corp. for $100 million, neutralizing some of the competition that has eaten into Apple's sales and giving the company new expertise selling machines directly to the public.
Apple is getting back the license that allows Power Computing, based in Round Rock, Texas, to sell Macintosh-based machines; Power Computing, a successful and highly visible maker of Macs, will stop selling the clones at the end of the year.
"Power Computing has pioneered direct marketing and sales in the Macintosh market, successfully building a $400 million business," said Steve Jobs, the Apple co-founder who has been leading the company while it looks for a new chief executive officer. "We look forward to learning from their experience, and welcoming their customers back into the Apple family."
Power Computing, the first company Apple allowed to make Mac clones, has been embroiled in a messy licensing dispute with Apple over how much it will pay to keep making the machines. Apple has been rethinking its decision to let other companies copy the Mac.
Apple is using its stock to pay for the purchase, which had been rumored on the Internet for weeks.
"It's very clear Apple wanted . . . the clonemakers to be partners, and in this particular case, they're taking it a step further," said Tim Bajarin, president of Creative Strategies Research International in San Jose.
"By making Power Computing the direct selling arm of the company, Apple gets into an area they desperately needed to participate in," he said.
The Power Computing name will remain independent of Apple, but it wasn't immediately clear what Stephen Kahng, Power Computing founder and CEO, planned to do with the name. The company earlier had said it was considering making clones of computers that run Microsoft's Windows software.
Clone makers, customers and industry observers have been alarmed by what they fear will be a reversal of Apple's 1994 decision to let other companies copy the Mac. The issue flared last month when Power Computing's outspoken president, Joel Kocher, resigned weeks after chastising Apple for not quickly licensing its latest technology.
The Power Computing deal is the second major acquisition for Apple in less than a year. Last December, it rocked the high-tech world by announcing its purchase of Next Software Inc., a company Jobs started after leaving Apple in 1985. Apple is using Next's technology to develop its future-generation operating system.