Power Computing

» see powercc.com as it lived, on the wayback machine

~ the last words ~

Apple spent the early nineties losing share to Windows machines and decided, in 1994, that licensing the Mac OS to other manufacturers might expand the platform rather than cannibalize it. Power Computing was the company that took that bet most seriously. Stephen Kahng founded it on 11 november 1993 in Milpitas, before there was a license to have, on the assumption that one was coming. It shipped its first Macintosh-compatible machine in may 1995.

The strategy was Dell's, applied to a platform Dell could not touch. Sell direct, build to order, skip the retail channel entirely and use the margin to put in faster parts. Within a year Power Computing had moved a hundred thousand units and booked $250 million in revenue with about three hundred employees. The PowerTower arrived in april 1996, the PowerTower Pro in july at 225 MHz, and in may 1997 the PowerTower Pro 250 was benchmarking above Pentium II systems. For roughly two years the fastest computer that would run the Mac OS was not made by Apple.

The advertising was loud in a way Apple's never was. Camouflage, staff dressed for a war, a "Fight Back" campaign at Macworld Expo in 1997, promotional material built around what Steve says. It was a company selling Apple's product back to Apple's customers while making fun of Apple, and for a while that was a viable business with $400 million a year in it.

The whole fight passed over Turkey without touching the ground. Macintoshes here in the nineties were prepress equipment, sitting in advertising agencies and print shops, and the number of households that owned one rounded to nothing against the price of a PC clone from Karaköy. A war over who was allowed to build a cheaper faster Macintosh was a war about a market I could not see from where I was standing.

~ the record ~

~ faster than apple ~

The clone makers were supposed to grow the platform by reaching customers Apple was not reaching. What happened instead was that they sold to people who were already going to buy a Mac, at lower prices with better specifications, and Apple's own hardware margin went with them. Power Computing was the most effective at this and therefore the most damaging. Apple was losing money in 1996 and 1997, and every clone sale replaced a high-margin sale with a low-margin license fee of around fifty dollars.

Kahng's counter-argument was that Apple was making bad hardware and pricing it badly, which was also true. Both things being true at once is what made the licensing program impossible to fix by negotiation. The math only worked for the licensees.

~ the day jobs bought it ~

Jobs came back in 1997 and the clone program did not survive contact with him. Apple's approach was to refuse to license Mac OS 8 to the clone makers, which turned every existing license into a dead end without technically breaking a contract. On 2 september 1997 Apple announced it was acquiring Power Computing's Mac OS license, its customer database and core engineering assets for $100 million in Apple stock plus about $10 million to clear its outstanding debts.

Power Computing kept shipping for a few months, tried to pivot to Windows PCs, and closed on 31 january 1998. UMAX carried on a little longer in Asia under the only Mac OS 8 license Apple ever granted, and then that ended too. The clone era lasted under three years from first shipment to last.

~ the legacy ~

Apple got two things out of it that were worth the money. It got the customer list, which it used, and it got several hundred engineers and a build-to-order direct sales operation that turned into the Apple Store online later in 1997. The company that spent two years attacking Apple in camouflage ended up supplying the machinery Apple used to sell direct for the next decade.

The argument itself never really closed. Every few years somebody points out that Apple sells hardware at hardware prices because nobody else is permitted to sell the operating system, and somebody else points at 1997 and says look what happened last time. Psystar tried it without a license in 2008 and was sued into the ground. The answer has been the same for thirty years and it is not going to change.

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