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February 20, 1996

Apple Licenses Mac OS to Motorola

By JOHN MARKOFF

SAN FRANCISCO -- Apple Computer Inc. said Monday that it would license its Macintosh operating system to Motorola Inc. and for the first time Apple said that it would allow Motorola to sell its own sublicenses to the popular software program.

While the announcement was expected, industry analysts said the licensing arrangement points to a new Apple strategy of confronting Microsoft Corp. and Intel Corp. in parts of the world where the personal computer market is not yet well developed. However, the new agreement still fell short of providing Apple with a licensing partner among the top PC makers in the United States.

Motorola executives said Motorola's manufacturing venture, Nanjing Power Computing Ltd., would use a recently announced joint venture with Panda Electronics Group in China to distribute desktop systems based on the Macintosh operating system there.

"It's clear for the Mac OS to grow in any kind of market share you have to get it by going to markets where there aren't a lot of computers already," said Pieter Hartsook, a computer industry analyst and publisher of the Hartsook Letter in Alameda, Calif.

Apple, based in Cupertino, Calif., is now the third largest computer maker in the United States. A shift in strategy might enable the company to grow more quickly in areas of the world that are just now entering the information age.

"The battle has just begun," said Gilbert Amelio, Apple's new chairman and chief executive. "We live in a world where only about half the people alive today have ever used a telephone let alone used a computer. There is an enormous untapped market."

The agreement announced Monday also indicated that Apple would be significantly more open with Motorola -- a giant electronics maker but a minor force in personal computers -- than it had been in in its earlier licensing arrangements.

Motorola and IBM are both making the PowerPC chips that are used in newer Macintosh computers. But IBM has recently indicated that it may be moving away from plans to push PowerPC-based computers in the personal computer marketplace because its operating system has not taken off in the desktop market.

Motorola, IBM and Apple teamed up in the early 1990s to develop a computer standard as an alternative to the dominant Intel-Microsoft personal computer design. However, the alliance has had a number of difficulties including the failure of a joint Apple-IBM software effort and Motorola's inability to keep pace with Intel's microprocessor developments.

Motorola officials said they were cautiously optimistic that their chip development efforts were picking up speed. The company plans to complete a new factory soon in Austin, Texas, known as MOS 13, to build advanced versions of the PowerPC chip.

Although Motorola executives said the company planned to concentrate on the high-end business market for its Macintosh systems, they added that Motorola was actively looking for companies to sell Macintosh products made by Motorola in the PC markets.

"We hope there are going to be people who focus on the low-end markets in the United States with our systems," said Joe Guglielmi, corporate vice president and general manager of the Motorola Computer Group.

One of the most glaring shortcomings of Apple's strategy has been the lack of a mainstream computer maker to license the Macintosh operating system. Apple has been promising such a vendor, and suggesting that it has been in discussions with major computer makers, but no such licenses have been announced, except for smaller start-up companies, or in markets outside the United States.

In a conference call Monday morning, Amelio said that Apple's principal motives in licensing its operating system were to expand the market and attract new software developers. Industry executives have suggested that Apple was at risk of losing its innovative edge because software developers are beginning to write programs for the Intel-Microsoft world first.

"This is good new for Macintosh developers," he said. "It will expand the base of users."

Apple has been working with IBM and Motorola on a new version of the Macintosh hardware system, known as the Common Hardware Reference Platform, or CHRP. A month ago, Apple showed a prototype version of that computer, running a version of the Macintosh operating system for the first time.

Motorola officials said they would begin shipping versions of Motorola Macintosh computers some time in the second half of this year.


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