Software Deal Turns Up Heat On Apple

The heat is on Apple Computer Inc.

Struggling to replace its aging Macintosh operating software, Apple was upstaged on Tuesday when another computer maker announced an agreement to license a powerful new system that Apple itself had an eye on.

Power Computing Corp., which makes clones of Apple Macintosh computers, plans to install the new operating system in all of its computers by next March and sell them at prices comparable to its current Mac clones. Its licensing deal with Be Inc., the small California company that created the software, should bring such high-end Mac users as graphic artists a far faster, simpler system for controlling the look and feel of their computers.

“It applies a great deal of pressure on Apple to sign a similar deal or be faced with Power Computing (becoming) a much more compelling choice than Apple hardware itself,” said Rob Enderle, an industry analyst with Giga Information Group.

Apple’s stock dropped 3 percent, or 75 cents per share to $24.25, in Nasdaq Stock Market trading Tuesday.

A spokesman at Cupertino, Calif.-based Apple declined to comment. Be’s deal with Power Computer was said to be unrelated to Apple’s long-rumored talks to buy privately-held Be and use its operating system in all future Macintosh computers.

A replacement for the Macintosh system is crucial to Apple’s struggle to climb back into the upper ranks of U.S. computer companies. With its next-generation operating system, called Copland, years behind schedule, Apple has said publicly it is talking to outside high-tech shops about supplying a replacement for its operating software.

Because the Be system is so new, there are no software applications that currently run on it. But Power Computing hopes to spur Be developers by including both it and Macintosh operating systems in its computers, allowing users to run their programs on either or both.