Cheap Apple Computer clone vendor Power Computing will begin selling Intel-based PCs and will expand in Europe using roughly $27 million from an initial public share offering (IPO).
Power Computing also announced it intends to enter the education market with its Power PC-based clones. The moves are a small blow for Power PC backers Motorola and IBM and a triple blow for Apple - it is a Power PC chip partner, sells Mac OS licences to Power Computing and education is one of the few markets where it still has a strong presence.
As only 10 per cent of Power Computing?s sales come from outside the US, it said it hopes to use the money to expand its Asian and European operations, which are based in Paris.
One of the first companies to sign to clone Apple boxes, Power Computing has made its money by supplying Macintosh-based hardware direct and through mail order at much lower prices than Apple. Schools and colleges with low IT budgets are likely to welcome cheaper boxes, sources said, and Power Computing will sign a deal with Apple?s largest education dealer in the US, Education Access.
Observers see Power Computing as one of the few manufacturers that can build systems cheaply enough to take on low-margin PC giants such as Dell and Gateway 2000, after hiring staff from Dell recently. Even Compaq and Hewlett-Packard have struggled to cope with falling prices and minute margins in commodity PCs in recent months. Fellow Apple cloner Umax is another low-cost vendor that offers cheap Windows-compatible machines.
The company will have money to spend as it will sell 3.45 million Power Computing shares at an offering price between $8 and $10, giving it a cash injection worth between $24 million and $30 million.
Power Computing?s prospectus said its business is limited by selling only Mac-based kit and it is developing selected Wintel desktop and mobile PCs which it plans to begin manufacturing, marketing and selling during the first half of 1998. It will also manufacture server systems which run Microsoft Windows NT and the Mac OS together.
"The company has experienced substantial growth in revenues relating to its Mac-compatible products. The company does not expect to sustain such rate of growth, if any, in the future, including upon its introduction of Wintel computer systems."
Power Computing made $1 million profit on turnover of $85 million in its quarter to 31 March 1997. In the same period last year it made $1.9 million profit on $34 million.
It also admits it has disagreed with Apple over royalty payment rates for the Mac OS licence, because it expects to pay the same royalty rate until the next Mac OS version, Rhapsody, is launched. Apple considers that Tempo, the update to Mac OS 8.0, is the next version and deserves a higher royalty payment. In its IPO filing, the company conceded that Apple can control the supply of parts it needs to build Apple clones.
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