Apple buys Power Computing assets for $100 million

Apple Computer will purchase the core assets of Macintosh clonemaker Power Computing for US$100 million in Apple common stock. As part of the deal, Apple will have the right to retain key Power Computing distribution, direct marketing and engineering employees. In addition, Apple will gain Power Computing's customer database and its license to distribute the Macintosh operating system.

Apple Computer will purchase the core assets of Macintosh clonemaker Power Computing for US$100 million in Apple common stock.

The fate of Mac clonemakers, including Power Computing and Umax, has been uncertain as they have been embroiled in negotiating the terms of their contracts with Apple. Last month, disagreements over licensing terms prompted Power Computing president and COO Joel Kocher to resign.

As part of the deal, Apple will have the right to retain key Power Computing distribution, direct marketing and engineering employees, Apple officials said. In addition, Apple will gain Power Computing's customer database and its license to distribute the Macintosh operating system, officials said.

Power Computing will keep its name and will sell Mac clones through the end of the year, officials said. Yesterday, the company said that it would announce mid-month two portable computers based on Microsoft and Intel technologies.

Neither Apple nor Power Computing were immediately available for comment.

Clonemakers' profits have reportedly stuck in the craw of Steve Jobs, Apple's co-founder and newly appointed member of the board, who is driving the changes at the beleaguered company. One analyst said that instead of helping to grow the Mactintosh platform, clonemakers like Power Computing have siphoned off sales which may have otherwise gone to Apple.

"The problem was both Apple and Power Computing were hoping that the total piece of the [Macintosh] pie would expand ... but Power Computing was just pulling slices from Apple," says Bob Tasker, an analyst at The Yankee Group in Boston.

But while buying out Power Computing's license to make Mac clones may help Apple sales in the short term, it does nothing long term to help the company, according to Tasker.

"It's a Band-Aid on a hemorrhage for Apple," Tasker says. "You want more outlets for your machines, not fewer."

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