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Send in the clones: Mac-compatibles compete for market share.

Once heralded as the leading tool for producing eye-catching catching designs, animation, desktop publishing and multimedia projects, the Mac is now under attack. Apple Computer's mighty Macintosh is facing real competition--from the still-expanding PC market and from the makers of Macintosh clones.

Apple reported a loss of $69 million for the first quarter of 1996 and laid off 1,300 workers as a result. In February, Apple's board ousted its CEO and president, Michael Spindler. This raises serious questions about whether or not Apple--which was plagued last year by parts shortages and equipment failures--can meet already backlogged orders and future demand for its computers and operating-system software. In addition, successful marketing of Microsoft's Windows 95 software--which emulates Macintosh's ease-of-use--has helped boost PC sales to almost nine times that of the Macs. All this has created a promising opportunity for Macintosh clones.

The clone makers are trying to seize the opportunity, offering a range of machines designed to function like Macs but in PC-styled cases. They offer greater power and larger hard drives, and can be up to 20% cheaper than comparable Mac systems. Unfortunately, the same parts shortages that face Apple are hampering the clone makers' high-volume production. Currently, the clone makers that have made the greatest inroads, Power Computing (800-671-6227) and Radius (800-227-2795), are abandoning Apple's strategy of selling a lower volume of computers at a higher price to produce high profit margins. Instead, they are trying to grow market share by providing more choices at a moderate price for different audiences.

"Unlike Apple Computer, which offers two or three configurations for the average consumer or company, Mac clones can be built to a customer's individual needs," says Mike Rosenfelt, Power Computing's director of marketing. Rosenfelt contends that the clone makers are starting out targeting the average consumer to generate home Mac sales, something Apple has been reluctant to do until recently. "Clones are designed for the small home-based office as well as the large corporations who are utilizing computers on an industrial scale," he says.

If the clone makers' strategy is successful, Apple will be forced to lower its prices, suggests Christopher Cover, database specialist for Simon & Schuster. "Staunch Mac users may stay loyal to their first love, but Windows 95 and competitive pricing may make the novice computer consumer bypass Macs and go for the Mac clone or PC," he theorizes. There is some evidence to support Cover's assessment. In a study conducted by Dataquest and Hambrecht & Quist, Apple's sales showed a steady decline in market share from 9.4% in 1993 to 7.6% in the first quarter of 1995. Apple's profits have also plunged, from approximately $600 million in 1992 to just over $400 million in 1995. Lowering price to generate sales may be Apple's last hope of preventing its market share from further eroding.

But the Mac clones themselves may have the biggest effect on Apple's market share. Power Computing appears to be the leading clone maker, with its PowerWave 604 line. The new computers have enough speed and power to compete in Macintosh's strongholds of publishing and graphic design. They all ship with a quad-speed CD-ROM drive, 16 MB of RAM and hard drives of 1GB or more. The PowerWave 604 line ranges in cost from $3,199 to $4,499 and is comparable to the Apple's more expensive 8500 and 9500 series.

Radius' clones focus on the lower end of the market. Its Radius 81/110 series machines come with quad-speed CD-ROM drive, 16 MB of RAM and hard drives of 730MB or more. They run on a PowerPC 601 chip, which is less powerful and expensive than the PowerPC 604 chip. Radius 81/110 machines range in price from $1,800 to $2,500; Radius also has faster, more powerful machines for heavy publishing work.

Any of the clone maker's products will generally offer you more power and speed for less money than a comparable Apple system.
COPYRIGHT 1996 Earl G. Graves Publishing Co., Inc.
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Copyright 1996, Gale Group. All rights reserved. Gale Group is a Thomson Corporation Company.

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Title Annotation:Apple Computer's Macintosh clones
Author:Scott, Matthew S.
Publication:Black Enterprise
Date:Apr 1, 1996
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