TV-PGMay 22, 1998: Whack! Down comes Apple's axe, lopping off a third of its resellers and half of its service centers. Meanwhile, Umax reveals that they've lost a ton of money in their whole Mac clone endeavor, and Microsoft gets to ship Windows 98 as planned, but their trial date is close enough to make them sweat...
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The Big Axe Falls (5/22/98)
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Remember way back in February when Apple shook up our quiet, mundane little world by announcing that it was pulling Macs out of all national retail stores except for CompUSA? It was a bold move for Apple to sacrifice shelf space in an already tight retail market, but they had determined that the old, non-functional Macs on display in uncaring stores like Sears and Computer City were hurting sales and public opinion more than they were helping. Well, guess what? Apple's swinging the axe again, and this time the targets are dealers, value-added resellers, and authorized service providers who are failing to live up to Apple's standards. A MacWEEK article discusses the carnage.

Apparently almost a third of the 3600 Apple-authorized dealers, retailers, and VARs have just been notified that as of June 26th, they'll be authorized no more. And more than half of the 8000 authorized service centers have also been let go. Given the way that Apple's market share has shrunk over the last several years, these moves are a logical cost-cutting strategy, but more importantly, Apple is weeding out those partners that aren't helping preserve and grow the Mac platform. The list of resellers to cut was based on a "detailed survey" which looked at such factors as advocacy, knowledge of Apple products, and revenue history and potential for growth in the reseller's area. As for the service providers, well, we're guessing that some of these places got certified in the mid-eighties and haven't seriously dealt with Macs in years. ("PowerPC? Izzat some kind of new-fangled Pentium thingy?")

It's a scary move, but then again, it's not nearly as scary as cutting all national retail stores except CompUSA-- and that decision appears to have been a good one, after all. Let's hope Apple knows what it's doing, again. Their track record's been pretty amazingly good of late.

 
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Further Clone Aftermath (5/22/98)
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Man oh man oh man, looks like nobody had any luck with the whole Mac cloning debacle. Power Computing cranked out great boxes that sold like hotcakes, but they weren't making any money, even before Apple put the hurt on them. Motorola got out while the getting was good, relatively speaking. Umax stayed in, and still makes Mac clones today-- or rather, they still sell Mac clones today, because once this inventory is gone, they're probably going to pack it in, as well. A Wired article tells how the cloner is losing money hand over fist, has all but ceased production on Mac-compatible computers, and is very unlikely to extend its Mac OS license past the July expiration date.

Umax reports that they have lost a staggering $1.1 billion since they began their Mac cloning operations. Doesn't that sound like a ridiculous amount of money? Well, you're right, it is-- that $1.1 billion is actually in Taiwanese dollars; it comes to only about $33 million in U.S. currency. (See, now it doesn't sound so bad, right? We're just trying to make you feel better.) Still, a loss is a loss, and it sure sounds like Umax's finance manager is speaking the gospel when he states that "almost everybody suffered losses from making computers for Apple." Even, you will no doubt recall, Apple.

Ironic, isn't it? The Golden Age of Clones is the one era that seemed so bright to us at the time, what with cheap, fast machines ripe for the plucking; but in retrospect, it's starting to look like one of the darkest periods in Mac history, with all the players maimed or killed, and absolutely no winners at the finish line. Good lord, imagine what might have happened if Steve hadn't killed cloning: the clone companies would've folded or pulled out due to unprofitability, Apple would have been bled to death too, and we'd probably all be using abaci by now. Dodged a bullet on that one, hmmm?

 
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Showdown in September (5/22/98)
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Well, Microsoft didn't get its requested seven months in which to prepare to argue its side in the current Department of Justice antitrust case, but they did manage to squeeze three and a half months from Judge Thomas Penfield Jackson; the trial date is set for September 8th, instead of sometime in December as Microsoft requested. Predictably, both sides are calling the decision a victory, though judging by what was said in court, it sounds like Microsoft isn't as happy as they could be. A Computer Reseller News article has more.

Apparently, when the judge declared the September trial date, Microsoft's attorney raised objections, stating, "We will not be ready. It will not be ready." He continued to state that he expected "stonewalling and obstruction" from Microsoft's "commercial foes" during discovery-- to which Jackson could not resist replying that the court could remedy that situation by appointing a special master. (Jackson, of course, had already appointed Lawrence Lessig as special master in the last antitrust case, only to see Microsoft have him ousted on appeal.) Evidently Judge Jackson is preparing for a career move into standup comedy any day now...

The real significance of the September date, however, appears to be that the judge is attempting to get the case resolved in record time by putting it on a "very fast track," in the words of Connecticut state attorney Richard Blumenthal. That's the last thing Microsoft wants, because as long as the trial drags on, they can ship Windows 98 free and unfettered, thanks to the judge's denial of Justice's request for a preliminary injunction. Regarding Windows 98, the bottom line is that Microsoft will be able to ship it next month as planned, until court proceedings dictate otherwise. That's unquestionably a big win for Microsoft, but since they now face a fast-moving case, it's only one battle in the war.

 
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