Power Computing Corporation


Power Computing Corporation was the first company selected by Apple Inc to create Macintosh-compatible computers. Stephen “Steve” Kahng, a computer engineer best known for his design of the Leading Edge Model D, founded the company in November 1993. Power Computing started out with financial backing from Olivetti and $4 million of Mr. Kahng's money.
The first Mac-compatible PC shipped in May 1995. Like Dell Computer, Power Computing followed a direct, build-to-order sales model. In one year, Power Computing shipped 100,000 units with revenues of $250 million in the first year. Power Computing was the first company to sell $1,000,000 of products on the Internet.
Power Computing released upgraded models until 1997 with revenues reaching $400 million a year. The Mac clone business was stopped after Steve Jobs returned as interim CEO of Apple in July 1997. In September, Apple bought the core assets of Power Computing for $100 million in Apple stock and terminated the Mac cloning business.

History

Power Computing Corporation was founded in November 1993 in Milpitas, California, backed by $5 million from Olivetti and $4 million of Mr. Kahng's money. At the MacWorld Expo in January 1995, just days after receiving notice he had the license to clone Macintosh computers, Kahng enlisted Mac veteran Michael Shapiro to help build the company. Shapiro helped to develop the original logo and brand and worked with Kahng to build the initial management team. Power Computing opened manufacturing and operations offices in Austin, Texas at the recently abandoned facilities of CompuAdd and engineering offices in Cupertino, California, staffed largely by members of Apple's original Power Macintosh team. In 1997, PCC relocated its headquarters to a location directly across I-35 from Dell's main campus, and remained there until Apple acquired PCC's assets in 1997. Mr. Kahng set out to create a simplified Mac design that made it cheaper and faster to produce the machines. He then targeted the mail-order market, where Power Computing could get a quicker return on its money than it could by selling through distributors.
At that time, Apple was leaning towards giving licenses to big time computer makers. Initially, even with Mr. Kahng's reputation as a "master cloner", getting Apple to take him seriously was a challenge. He ended up bringing Olivetti people with him to meetings. Apple engineers gave him the help he needed to make a Mac prototype. The team reduced the size of the Apple main circuit board so that it could fit into a standard PC box. They also used off-the-shelf PC power supplies and monitors.
A few days before the end of the year, it was announced that Apple Computer picked Power Computing to be its first Macintosh clone maker. Jim Gable, Apple's director of Mac licensing was quoted in The Wall Street Journal saying " is clever and fleet of foot. We want him to succeed."
Power Computing's goal was to have clones available for as little as $1,000 each starting in March or April 1995. John C. Dvorak, a computer columnist at MacUser magazine, remarked, "Apple is not going to know what hit them. Stephen Kahng is tenacious." When the machine was released, Macworld's review said

Initial machines

The initial clones were available in desktop and tower configurations, and were based on the PowerPC 601 80 MHz, 100 MHz and 110 MHz microprocessors. They were comparable to Apple Computer's Power Macintosh 7100 and 8100 class of computers. Pricing ranged from $1,995–2,899.
Unlike Apple at the time, Power Computing pressed for direct sales. After a customer placed an order for a semi-customized configuration, the system was delivered the next day. Following the delivery of the system, Power Computing called the customer to surmise their needs and offer technical support and customer service. In addition, Power Computing set a goal of a 3-minute response time for all inquiries.
In May 1995, shortly after the original clone announcement, Power Computing teamed up with Austin, Texas based Metrowerks to offer the Power Computing CodeStation. The CodeStation was a package consisting of the recently announced Power Series clone, rebranded and bundled with the latest PowerPC version of CodeWarrior. CodeStations were sold through Metrowerks at discounted developer prices and it is unknown exactly how many units were sold.
At the end of July 1995, Power Computing announced that it had successfully ramped the volume production capability of its Power 100 system. The efficiencies provided by volume production allowed Power Computing to lower the base configuration price of a "Power 100 Starter System" to $1,699. In addition, the company instigated a comprehensive quick-ship program that allowed popular configurations to ship the same day. Power Computing advertised models up to the "Power 120 XL", a $5,499 machine built around the PowerPC 601+ chip, a 2GB SCSI hard drive, 17 inch Sony monitor, 4X-speed CD-ROM, built-in Ethernet, and 32MB RAM.
At the end of October 1995, Power Computing introduced the world's fastest Macintosh-compatible computer, the PowerWave, based on the PowerPC 604 microprocessor. Per an article in the Austin American-Statesman, Power Computing said its machine would far outperform Windows-compatible machines based on Intel's Pentium processors.
At the early 1996 Macworld trade show in San Francisco, Power Computing found itself the star attraction because Apple was so preoccupied with its mounting financial woes that then-CEO Michael Spindler cancelled an appearance. PCC got another break when a computer firm that had spent $170,000 erecting an immense booth pulled out at the last moment, allowing Mr. Kahng to pick up the prime exhibiting space for $30,000.
At that Macworld, the PowerCurve — a line of mid-range, CPU-upgradeable Mac OS systems based on the PowerPC 601 and the industry-standard PCI expansion bus — was introduced. Unique to the PowerCurve 601/120 was the native support of VGA–style monitors.

Market success

In May 1996, just one year after Power Computing started selling Mac clones, the company reached the 100,000 units sold milestone. The number of employees had grown to 300. And as noted in an article in The Wall Street Journal by Jim Carlton, Power CEO Steve Kahng “still hasn’t taken his clubs out of the bag”.
That same WSJ article noted that one-half of Power Computings's customers represent people who would have otherwise purchased a computer from Apple. The others are people who might have bought a non-Mac computer.
In June 1996, Mr. Kahng persuaded a unit of Lockheed Martin Corp. to buy 3,000 of his computers rather than Apple's. Though a longtime Apple customer, Lockheed Martin said Power beat out Apple's bid by agreeing to such extras as loading in special engineering software before shipping the machines out, a request that Apple declined. This was the largest sale in the history of Macs or Mac-compatible computers at the time.
Kahng was able to leverage his strong relationship with IBM to get access to the fastest PowerPC processors sooner than anyone else. As a result, starting in April 1996 and continuing through 1997, Power Computing regularly put out the fastest computer system in either platform.
At Macworld Expo 1997, the company presented a military-themed campaign that urged the Mac faithful to “Fight Back.” Power Computing employees were outfitted in camouflage. The video wall looped “why we fight” propaganda. And “Steve Says” posters, flyers and T-shirts were ubiquitous inside the Moscone Center as well as in the streets surrounding the convention center. However, the end was near.

Acquisition by Apple

In July, Apple's CEO Gil Amelio was ousted by Apple's Board of Directors, and Steve Jobs soon returned as interim CEO. Jobs believed that Apple had started to license clones too late to repeat the business model pioneered by Microsoft in the early 1980s.
At MacWorld Boston in August, Power Computing President Joel Kocher unsuccessfully tried to convince attendees to rally against Apple's stiff new licensing policies. He and other executives resigned soon afterwards as Power Computing's board chose to be acquired instead. Apple Computer bought key assets of Power Computing for more than $100 million in Apple stock and roughly $10 million in cash. As part of the deal, Apple got back the license that allowed Power Computing to sell Macintosh-based machines.
Power Computing originally announced plans to make Wintel clones but was forced to halt operations in December 1997. In January 1998, the last of Power Computing's physical assets were auctioned off, and Power Computing shareholders were mailed Apple Computer shares representing their pro rata share in the now-defunct corporation.