Apple near a licensing accord with IBM Big Blue would sell Macintosh software

April 10, 1996|By BLOOMBERG BUSINESS NEWS

CUPERTINO, Calif. -- Apple Computer Inc. is expected to complete a licensing agreement with International Business Machines Corp., for the Macintosh operating system, analysts and a published report said yesterday.

Apple and IBM are in the final stages of negotiations, which are expected to be concluded within several weeks, USA Today reported. The agreement will call for IBM's Microelectronics division to sell the Macintosh software to customers that buy IBM's PowerPC chip, the newspaper said.

Officials at Apple and IBM would neither confirm nor deny the report.

An agreement is no big boost to money-losing Apple Computer because IBM, the world's No. 2 personal computer maker behind Compaq Computer Corp., still won't be making Apple-compatible machines, analysts said.

"It's a very half-hearted endorsement," said Pieter Hartsook, an independent industry analyst. "It certainly doesn't hurt Apple, but it's not going to help them a whole lot."

In 1994, Apple began to reverse its decades-old strategy of developing all its own hardware and proprietary software, which made its PCs more expensive than the competition.

Apple executives said licensing is important to the company's future because it gives them a way out of selling very low-cost systems. The company will leave that less-profitable market to clone makers and increase overall market share for Mac systems, the executives said.

The problem, analysts said, is that IBM won't be building the completed systems needed to make an Apple-compatible machine, so customers would still need to spend time and money to engineer the internal circuitry themselves.

IBM may find partners to provide that service among makers of computer chips or motherboards, the completed circuitry that makes up the guts of a personal computer.

Meanwhile, IBM still isn't manufacturing Apple-compatible machines itself, which had been expected since IBM introduced its line of PowerPC computers in June.

IBM now sells PowerPC machines with high-end products from Apple's software competitors, including Microsoft Corp.'s Windows NT. IBM said in June that it would ship PCs with the Macintosh operating system in the second half of this year.

An Apple licensing agreement -- an important endorsement from IBM -- isn't as comprehensive as the agreement signed last month with Motorola Inc., analysts said.

Motorola, a builder of PowerPC chips and motherboards, will be able to sublicense the Macintosh operating system to PC makers who buy motherboards, analysts said.

That means that small companies with little engineering expertise will be able to quickly assemble and sell Macintosh PCs.

IBM, Apple and Motorola jointly developed the PowerPC chip in an effort to compete against chips made by Intel Corp., which use Microsoft software. Intel's family of x86 chips run more than 75 percent of the world's PCs.

Apple's stock rose $1.625 to $26 yesterday. IBM shares lost $1.50 to $117.875.

Pub Date: 4/10/96

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