Motorola exits Macintosh business

Motorola Computer Group (MCG) today officially pulled the plug on its Macintosh StarMax clone line following Apple Computer's recent decisions not to license new Macintosh hardware designs. Motorola, the parent company, says that as a result of the decision to exit the Macintosh clone market it expects to record a special charge of approximately US$95 million in the third fiscal quarter. Combined with weakness in the paging market, Motorola will post earnings for the quarter that are significantly lower than expected.

Motorola Computer Group (MCG) has officially pulled the plug on its Macintosh StarMax clone line following Apple Computer's recent decisions not to license new Macintosh hardware designs.

The decision comes at a high price tag.

Motorola, the parent company, says that as a result of the decision to exit the Macintosh clone market it expects to record a special charge of approximately US$95 million in the third fiscal quarter. Combined with weakness in the paging market, Motorola will post earnings for the quarter that are significantly lower than expected.

Motorola StarMax systems will be available for sale until the end of 1997 and all warranty and support commitments will be continued, company officials said. In addition, Motorola will now provide existing and new StarMax buyers with one year of telephone support, which previously was limited to 90 days, in expectation of a deluge of calls from concerned users, officials say.

Earlier this month, Apple ruled out any Mac OS 8 licenses for systems based on the Common Hardware Reference Design (CHRP) architecture. Motorola said it had reached an essential agreement with Apple in June, but Apple's reversal on its licensing policy made an implementation of the agreement impossible.

Negotiations for a new agreement continued until yesterday but remained fruitless, Joe Guglielmi, corporate vice president and general manager of MCG, says.

"Obviously, we are disappointed," he says. "We believe there could have been a better future and that we could have brought innovation to the market. It was a tough decision. But we had no choice."

Now more than ever, Apple has to innovate the Macintosh platform on its own and finance the necessary and expensive research and development, Guglielmi says.

He also said that Motorola believes that a viable clone market would only have developed following the release of CHRP-based systems, suggesting that Apple made its retreat from the clone market too soon.

"We poured millions of dollars into advancing the Macintosh platform, which will now go away, and Apple alone has to bring innovation to the market," he says.

Guglielmi leaves no doubt that Apple's reversal of strategy followed Gil Amelio's departure as CEO, after which Apple's new management reevaluated its strategies and decided it is no longer interested in a competitive clone market.

Motorola's exit leaves only Umax as a Mac clone maker. Umax reached a licensing agreement with Apple for non-CHRP based systems just last week.

Motorola will shift its engineers from the MCG group to its embedded systems unit and will not be able to ship its first CHRP-based ready-to-go system, the StarMax 6000, which will now collect dust in its warehouses.

The principal agreement reached in June with Apple included substantially higher licensing fees, which was consistent with Apple's desire, Guglielmi says.

Motorola Computer Group of Tempe, Arizona, can be reached at http://www.mot.com/.

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