IBM, Apple Mac pact

Electronic News, May 6, 1996 by Cynthia Bournellis

Cupertino, Calif.--IBM and Apple Computer signed an agreement to license current and future releases of the Macintosh operating system (OS) to OEMs for the development of Mac clones and other systems based on the PowerPC microprocessor.

The arrangement is intended to open up the Macintosh OS market and is a "solid first step for Apple in going from a closed to an open system," said David Ryan, manager of product line marketing for PowerPC at IBM Microelectronics in Essex Junction, Vt. Mr. Ryan would not give further details, but said IBM is currently in talks with two medium-sized Taiwan vendors to deliver Mac clones.

IBM is also announcing today that IBM Microelectronics is working with its PowerPC development partners on a PowerPC platform reference design, which will be available to the industry later this year. The reference design can be customized by motherboard manufacturers and systems integrators to develop their own systems, making it easy and more cost effective for OEMs to build Mac hardware systems.

IBM's licensing arrangement with Apple includes a sublicensing deal where IBM will sell the PowerPC chip separately, along with the Mac OS license. The company said opportunities exist in the desktop, server, workstation and portable computer markets, as well as the consumer arena, where a Mac OS device exists.

But the big question on everyone's minds is whether or not IBM will manufacture Mac clones. The company said it has no intention to do so at this time, even though IBM's agreement with Apple gives them the option to. Nor does IBM plan to build motherboards.

"If you license the Mac OS at the motherboard level, you limit the system maker's choice from whom they can buy a board," said an IBM Microelectronics spokeswoman. "Our strategy enables OEMs to differentiate their systems. This license will let the industry participate, not just IBM,"

It's no secret that Apple's computer sales need an almighty boost. For the past two years, computer shipments have been in the dumps. According to market research firm Dataquest, out of the 18 million personal computers shipped in the U.S. in 1994, Apple captured a meager 11 percent of the market. That figured inched forward by a mere 1 percent last year--total U.S. PC unit shipments in 1995 were 22 million. Apple also posted a $740 million loss for its first quarter ending March 29 (EN, April 22).

Industry observes agree that IBM's licensing deal will be a big boost for Apple and the industry. "IBM can grow the market for everyone, because they know how to sell systems and can get to the customers Apple could not," said Michael Rosenfelt, director of marketing at Power Computing Corp. in Austin, Texas. Power Computing was the first licensee of Mac-compatible systems last year. Mr. Rosenfelt believes the IBM arrangement will only help to strengthen Power's business. The company released a line of new Mac OS-based products last week based on the new PowerPC 604 processor, with 180MHz and 166MHz versions.

"This is a positive move," said Tony Massimini, chief of technology at Semico Research in Phoenix. "People have been harping on Apple for years to do this.

Apple won't command 90 percent of the market, but they will see some growth."

Apple's licensing strategy is built around the Common Hardware Reference Platform (CHRP). CHRP extends the Mac OS by freeing OEMs from Apple's proprietary hardware, as well as allowing third-party software developers to write for the platform. "The software community is cheering us on," said Apple CEO Gilbert Amelio during a telephone conference call last month.

In conjunction with the IBM/Apple announcement, a number of firmware, chipset and motherboard vendors will reveal their plans today to build products based on PowerPC/Mac OS systems.

FirmWorks, a developer of Open Firmware products in Mountain View, Calif., is making its Power Firmware software available to developers to help them bring Mac OS-compatible systems based on the PowerPC to market quickly. Open Firmware is a portable boot Firmware system that enables computers to support the booting of multiple OSes and processor-independent, plug-and-play add-in cards.

"We are acting as a glue technology in order to bring the Mac OS onto the IBM computer hardware reference platform," said Michael Summers, president/CEO of FirmWorks. "We believe the Mac OS has lots of power and draw in the marketplace and are excited that it will migrate onto new hardware spaces. The name of the game here is to have a cost-competitive platform."

Next month, VLSI Technology in San Jose, Calif., will supply sample quantities of its Gold Eagle chipset for the Mac OS PowerPC platform. While VLSI won't release the product's specifications yet, Umesh Padval, VP/GM of VLSI's Computing Group, said the company's challenge will be to provide the same performance or higher as that of x86 processors.

Tomorrow, UMAX Computer Corp., of Fremont, Calif., will unveil its first PowerPC Mac OS systems, scheduled to ship in June. A subsidiary of UMAX/Elite Group in Taiwan, UMAX Computer will also roll out a family of desktop Mac clones over the next few months. And Georgia-based DayStar Digital, a supplier of Mac OS-based multiprocessing computers for the high-end media publishing industry, released two new configurations of its Genesis MP multiprocessing workstations last week.