Apple?s decision to cull the Macintosh clone market came back to haunt it on the eve of MacWorld when Texas manufacturer PowerTools sued for $100 million in damages after being effectively put out of business.
In suits filed in Austin, Texas, PowerTools accuses both Apple and clone manufacturer Umax Data Systems of state and federal anti-trust practices. It alleges that under pressure from Apple, UDS?s California subsidiary stopped supplying it with systems, breaching a two year contract signed in September last year.
PowerTools complains that:?As a result of the conduct of [Apple and UDS], PowerTools has no wholesale source of supply for the key component of its competitively superior products. PowerTools has attempted to serve its customer base by purchasing equipment at retail prices for upgrade and resale, but such supplies are limited and do not provide a viable long-term solution.?
At the end of December, PowerTools posted a notice on its Web site announcing that it could no longer accept new orders. Company chief executive Vincent Wong confirmed in the notice: ?Due to our inability to arrange a reliable wholesale source of supply of component parts, PowerTools has been required to discontinue accepting orders for new products for an indefinite period.?
In 1995, Apple began licensing its MacOS systems software to third party manufacturers including Motorola, Power Computing and Umax. But Apple?s interim CEO Steve Jobs killed most of these deals last year, arguing that they damaged the already dwindling sales of Apple?s own Macintosh machines.
PowerTools manufactured its first Mac clones in early 1997. Operating as a virtual company with most of its marketing and sales functions outsourced, it was able to operate with more competitive profit margins and enabled it, according to the company, to be ready to ship products up to six months earlier than its rivals.
The company?s most recent X-Force machines compete with Apple?s new G3 computers, but because PowerTools has no direct licensing agreement with Apple, the machines are not certified by Apple and were made with components from UDS in Taiwan.
According to the suits, UDS bowed to pressure from Apple and transfered its contract with PowerTools to a subsidiary in California called Umax Computer Corporation which is prevented from selling incomplete systems under the terms of an agreement with Apple. As such, it could not supply PowerTools with the components it needed.
According to the company, it has lost $50 million of business as a result of Apple and UDS. It claims to have obtained commitment from independent Mac dealers to purchase more than than 600 machines per month. As such, it wants damages awarded of at least $100 million.
In its suits, PowerTools concludes: ?In short, [Apple and UDS?s] wrongful conduct described above has destroyed PowerTools' goodwill and its ability to remain a going concern.?
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