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You've Got Company, Mac


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YOU'VE GOT COMPANY, MAC

The Mac clone, finally, is about to happen. On Mar. 15, a Silicon Valley upstart will announce what for nine years seemed impossible: technology that opens the way for the first legal imitations of Apple Computer Inc.'s Macintosh computer.

NuTek USA Corp., a little-known company just three miles westof Apple's Cupertino (Calif.) headquarters, says it has completed a painstaking, four-year odyssey to develop the critical software and hardware from scratch. It is ready to sell its knowhow to assemblers and resellers, who could build Mac compatibles selling for at least $300 less than comparable Apples (chart). NuTek also plans to sell a $2,996 machine of its own, called the Duet, which runs both Mac and IBM-compatible software. Says NuTek founder Benjamin Chou: "We guarantee our technology. It is absolutely original."

`WORKALIKES.' On the surface, at least, NuTek's achievement is remarkable. It has recreated an operating system, a chip set, and a user interface--all essential components that took the talents and resources of three different companies when the IBM personal computer was cloned. Even more impressive, says G. Gervaise Davis III, an intellectual-property attorney retained by NuTek, is that Chou's engineers did it from the ground up. The hardware and operating system are not carbon copies of the Mac but have been developed to act like a Mac--what NuTek calls Mac "workalikes." The prize: a piece of the $5.5 billion Apple market. Clonemakers have been able to steal away most of the 63% share that IBM held in personal computers in 1984. Not so for Apple. For nine years, it has enjoyed the luxury of being the only provider of Macintosh technology, allowing it to sell its machines at a 10% to 15% premium over IBM's computers. It is an advantage Apple has guarded ferociously, with 90 patents on its various Macs and a contingent of lawyers.

Is it too late for NuTek? Analysts believe that grabbing even a small piece of Apple's market will be tough for the startup. Apple now sells inexpensive Macs of its own, some sold at street prices below $1,000. And it has lowered prices on more advanced models. Clonemakers will be hard-pressed to significantly undercut Apple. The lower-priced machines, moreover, likely will face resistance from distributors and retailers reluctant to antagonize Apple.

LEGAL BRIGADE. Even if Apple fails to throw around its distribution weight, it probably will deploy plenty of lawyers. So far, the only companies that have built Mac-compatible machines have used chips taken from old Macs. Others that tried to create clones from scratch have backed off after visits from Apple's lawyers. Similarly, says attorney Jack Brown, who has helped Apple in past infringement suits, Apple will probably pursue some legal action to be sure NuTek's claims are accurate.

Apple executives declined to comment on NuTek's technology until it hits the market, saying only that it "aggressively" defends its patents. Says an Apple spokesman: "Apple does not believe it is possible to create a clone of a Macintosh computer without violating our intellectual-property rights." Chou and NuTek's other financial backers, who have sunk a total of $10 million into the company, say they will fund any legal defense.

Chou has plenty riding on the outcome. The 39-year-old engineer argues this is a high-risk gamble that could also bring in "the highest return." To make that happen, he and 15 engineers in 1989 began studying the few publicly available specifications for the Mac, then documented each development to prove they did their own work. Chou also refrained from hiring any former Apple employees to head off claims of trade-secret theft. The "clean room" produced a machine that isn't a Mac yet does what a Mac does--though Chou doesn't yet claim 100% compatability.

Chou says he is only now approaching dealers and resellers about his NuTek technology. And the early response is good. Chou says he has signed up 60-plus companies to sell the so-called Mac-alikes in the U.S., Europe, and the Far East. One of the few that he would identify, reseller Xcellant Corp. in Fremont, Calif., estimates it eventually will sell 7,000 to 8,000 computers a month. Says President Chen-Hwa Shin: "Apple may sue just to flex its muscles. But if they sue, they're only going to make a name for us."

But NuTek is hoping for far more than a name. It wants some fortune, too. As many clone startups before it have discovered, a big splash doesn't necessarily guarantee a big return. Kathy Rebello in Cupertino, Calif.


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