After threatening to jack up its operating-system licensing fees, Apple may be tempering its approach during negotiations with clone-makers.
The Wall Street Journal reported Thursday that the licensees - including IBM, Motorola, and Power Computing Corp. - said they expect to pay slightly higher fees but will not be forced to change their lineup.
"If there is a fallout among those partners, there is no market for the Power PC chips they've spent so much money to develop," a source close to Apple told Wired News on Wednesday. In essence, the investment in the chips - which made possible the clones Apple blames for slicing into its revenue - may ultimately be the company's lifeboat.
Apple had been proposing huge increases in its fees, leading the clone-makers to fear the company was trying to drive them out of business. On Wednesday, The New York Times reported that a threat to raise the fees tenfold created an antipathy that "could mean the end of the so-called Power PC alliance that IBM and Apple created in 1991 along with Motorola."
But Apple's new, moderated tone appears to indicate an awareness that it needs the clone-makers as much as they need it.
Having typically bet on high revenue margins rather than large market share, Apple has really felt the bite of competing with clone-makers - which have sometimes managed to get to market quicker and cheaper than the trademark company. The clone-makers have been credited with keeping the Mac OS market share up, but at a cost to Apple's revenue. Licensing the higher-priced computers, which carry rather large profit margins, has apparently cut significantly into Apple's profits.
"It is Apple’s intention to help create an environment where both Apple and Mac OS licensees can be successful and profitable," Apple spokeswoman Katie Cotton said on Wednesday. "The two are not mutually exclusive."
Observers told Wired News that Apple may well need to restructure its licensing into a sliding-scale format and charge higher fees for the more profitable high-end computers, while encouraging clone-makers to make the lower-priced models that carry smaller profit margins.
Apple is striking a careful balance between increasing licensing fees and maintaining healthy relationships with its Power PC and clone-making allies, according to insiders. Some even think IBM may step in if Apple management heads in a direction potentially disastrous for the Power PC platform. In the end, the constant disaster reports may actually add up to Apple's salvation.
