Killing the Clones
One of the great debates about Apple was whether it should have licensed
its operating system
more aggressively to other computer makers, the way Microsoft licensed Windows. Wozniak had
favored that approach from the beginning. “We had the most beautiful
operating system,” he said,
“but to get it you had to buy our hardware at twice the price. That was a mistake. What we should
have done was calculate an appropriate price to license the operating system.” Alan Kay, the star
of Xerox PARC who came to Apple as a fellow in 1984, also fought hard for licensing the Mac
OS software. “Software people are always multiplatform, because you want to run on everything,”
he recalled. “And that was a huge battle, probably the largest battle I lost at Apple.”
Bill Gates, who was building a fortune by licensing Microsoft’s operating system, had urged
Apple to do the same in 1985, just as Jobs was being eased out. Gates believed that, even if Apple
took away some of Microsoft’s operating system customers, Microsoft could make money by
creating versions of its applications software, such as Word and Excel, for the users of the
Macintosh and its clones. “I was trying to do everything to get them to be a strong licensor,” he
recalled. He sent a formal memo to Sculley making the case. “The industry has reached the point
where it is now impossible for Apple to create a standard out of
their innovative technology
without support from, and the resulting credibility of, other personal computer manufacturers,” he
argued. “Apple should license Macintosh technology to 3–5 significant manufacturers for the
development of ‘Mac Compatibles.’” Gates got no reply, so he wrote a second memo suggesting
some companies that would be good at cloning the Mac, and he added, “I want to help in any way
I can with the licensing. Please give me a call.”
Apple resisted licensing out the Macintosh operating system until 1994, when CEO Michael
Spindler
allowed two small companies, Power Computing and Radius, to make Macintosh clones.
When Gil Amelio took over in 1996, he added Motorola to the list. It turned out to be a dubious
business strategy: Apple got an $80 licensing fee for each computer sold, but instead of expanding
the market, the cloners cannibalized the sales of Apple’s own high-end computers, on which it
made up to $500 in profit.
Jobs’s objections to the cloning program were not just economic, however. He had an inbred
aversion to it. One of his core principles was that hardware and software should be tightly
integrated. He loved
to control
all aspects of his life, and the only way to do that with computers was to take
responsibility for the user experience from end to end.
So upon his return to Apple he made killing the Macintosh clones a priority. When a new
version of the Mac operating system shipped in July 1997, weeks after he had helped oust Amelio,
Jobs did not allow the clone makers to upgrade to it. The head of Power Computing, Stephen
“King” Kahng, organized pro-cloning protests when Jobs appeared at Boston Macworld that
August and publicly warned that the Macintosh OS would die if Jobs declined to keep licensing it
out. “If the platform goes closed, it is over,” Kahng said. “Total destruction. Closed is the kiss of
death.”
Jobs disagreed. He telephoned Ed Woolard to say he was getting
Apple out of the licensing
business. The board acquiesced, and in September he reached a deal to pay Power Computing
$100 million to relinquish its license and give Apple access to its database of customers. He soon
terminated the licenses of the other cloners as well. “It was the dumbest thing in the world to let
companies making crappier hardware use our operating system and cut into our sales,” he later
said.
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