Motorola Licenses Macintosh Operating System Apple Computer Struggles To Bolster A Shrinking Market Share

Apple Computer Inc., seeking to revive its stalled licensing strategy and boost its shrinking market share, said Monday it has granted rights to its Macintosh operating system to Motorola Inc.

The agreement could greatly extend the Macintosh’s reach into China through a joint Motorola venture with that nation’s biggest electronics company. It also is part of an Apple drive to spur the development of more Macintosh software.

Encouraging more Macintosh software is seen as critical to the survival of Apple, which is suffering through a string of financial and marketing mishaps.

“Our intention is to get as many people around the world excited using (the Macintosh operating system) as we can,” said Gilbert Amelio, Apple’s new chairman and chief executive officer.

With Monday’s agreement, Motorola becomes the largest company to “clone” the Macintosh. It also is the first company to win the right to sublicense the MacOS, the program that controls the Mac’s basic operations.

That means other manufacturers that buy Motorola boards and systems - the inside workings of a computer - can make machines running the Mac software without having to negotiate with Apple.

“I think this is a significant step because it makes the (licensing) process more flexible and allows us to move ahead quickly,” Amelio said.

The deal with Motorola is the biggest strategic move announced so far by Amelio, who took charge of Apple earlier this month. While the agreement was in the works before he became CEO, Amelio has pledged to aggressively pursue such licensing deals to try to encourage software developers to keep writing programs for the Macintosh.

Amelio succeeded Apple CEO Michael Spindler, who was ousted Feb. 2 after the company reported a loss in the last three months of 1995, forecast another for the start of 1996 and began laying off 1,300 workers.

Apple, based in Cupertino, Calif., for years would not let other companies make copies of its popular Macintosh. Industry observers consider that Apple’s greatest mistake, a missed opportunity to set the industry standard.

But the company, hurt by competition from personal computers built around Intel Corp. chips and Microsoft Corp. software, relented in September 1994.

So far, however, only a handful of small companies have reached licensing agreements with Apple, most notably Power Computing Corp. of Milpitas, Calif.

Under Monday’s pact, Schaumburg, Ill.-based Motorola will use the MacOS in its own brand of workstations intended for corporations, a market dominated by Sun Microsystems, Hewlett-Packard and Silicon Graphics. Apple is strong in the home, education, desktop publishing and multimedia but has made few inroads in the business world.

“We’re really excited about this. We think it’s a great opportunity to promote and grow the Mac platform,” said Joe Guglielmi, vice president and general manager of Motorola’s computer division.

Apple put no restrictions on what type of computer Motorola or sublicensees can make or where they can sell them, he said.

Motorola would not give details on how many Mac clones it would make, when they would be on the market or how much they would cost.

Motorola’s Mac license is itself no big deal, said Pieter Hartsook, publisher of the Hartsook Letter, an Alameda, Calif.-based industry newsletter. After all, Motorola for years has made microprocessors for Apple and along with Apple and IBM is working on computers with a common design.

More important is Motorola’s ability to let other companies use Mac software and Motorola’s expansion into Chinese markets, Hartsook said.

“If Apple wants to grow and wants the Mac platform to grow, they have to look at some of the emerging markets rather than trying to grab market share” from competing computers, he said.

Motorola, in addition to making workstations with the MacOS, plans to manufacture and distribute Mac clones in China through its joint venture with Panda Electronics Group. The computers will be aimed at China’s small but growing consumer and education markets, Guglielmi said.

With its own brand of workstations running Macintosh software, Motorola will emphasize machines built according to the PowerPC Platform specification it developed with Apple and IBM. Those machines will be able to run more than one operating system. But Motorola and sublicensees may make computers similar to the current Apple Macintosh.

Apple declined to forecast how much revenue the agreement with Motorola could generate. While the company will get license fees, it’s primarily concerned with making the Macintosh operating system more popular.

“Our primary motivation … is to expand the platform and give our developers a broader base in which to target new applications,” Amelio said. “It makes our product more exciting and attractive.”