Why They're Cloning Apple

POOR APPLE. IF YOU BUY THE conventional wisdom, the once vaunted computer maker can't quite get it right. Last week it finally did what it should have done half a decade ago: let other manufacturers clone its popular Macintosh computer and defend its dwindling share of the burgeoning PC market. But industry experts dissed the move as too little, too late.

Hardly anyone had ever heard of Apple's partner in the venture, Power Computing Corp. Who's that? asked Richard Shaffer of Technologic Partners in New York. "We're all waiting for bigger names, bigger companies." If leading PC makers like Compaq Computer don't make Macs, the thinking goes, Apple's cloning campaign will fizzle.

Perhaps, but Apple's deal makes sense. So what if its first partner isn't a big marketing name? Compaq and Dell Computer came from nowhere to dominate the industry. Power Computing, some experts say, could prove no less formidable. It's headed by a master cloner who once introduced Leading Edge, an IBM knockoff from South Korea that for a time during the mid-1980s was the third best-selling personal computer in America. And cloned Macs will be cheap. If today's increasingly cost-conscious computer buyers take an interest, so will big manufacturers like Gateway 2000 and IBM.

Ambitious plan:

Stephen Kahng, head of the Silicon Valley start-up, is nothing if not ambitious. He aims to build a $1 billion company within five years by selling Macs (built around Apple's famously easy-to-use operating system and its new ultrafast PowerPC microprocessor) at prices everyone can afford-reportedly around $1,000, roughly a third less than Apple's. That may cannibalize Apple's sales, But the company bets such losses will be more than offset by licensing fees and peripheral business the clones bring in. "Every time someone buys a computer," says Apple vice president Don Strickland, "they buy other stuff, too." Like Apple software, printers, scanners and modems.

Success isn't guaranteed. Over the years Apple has become a niche player, dwarfed by Intel and Microsoft. "People just aren't buying Macs, no matter what the price," says Shaffer. Another hurdle: the biggest computer makers are waiting to see whether cloned Macs sell. They may not have to wait long. The deal with Power Computing "is the tip of a very large iceberg," says a Silicon Valley consultant close to Apple. He expects the company to announce as many as 12 additional licensees within the next three to six months, from Japan's Fujitsu to Italy's Olivetti. The only major American partner is likely to be Motorola, already joined with Apple to produce the PowerPC. If the cloned Macs take off, others will jump aboard. For Apple, it's better late than never.

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