Motorola to the Macs StarMax

Kevin Curry is product marketing manager of the Motorola Computer Group's Mac OS section. Curry came to Motorla from IBM, and has been working in desktop systems at Motorola for about two years. We spoke with him during his trip to Tokyo in February.

interviewed by Wm. Auckerman

Kevin Curry: Basically, what we've done is split the group into commercial and technical divisions. In the past, the commercial business was kind of mixed in with the technical business, so what we've done is separate the two. We now have our own responsibility for P&L [profit and loss], so we can directly measure for each one of the product sets.

That's part of the philosophy that goes into the split, and we think it was a good split. We can be a little more focused now on the commercial side instead of blending in with the technical side, which is more telecom focused versus a real commercial market focus for the Mac team.

Underneath, we have our own manufacturing, engineering, marketing, communications, support, website, etc. Jim Schneider is our general manager on the commercial side.

I understand the commercial products division consists of three business units: Unix servers, mobile computing, and desktops. What's the revenue split between the three?

Curry: StarMax, the desktop group, is probably going to be the leader for the volume opportunity, maybe 85%. AIX servers is going to be 10% to 15% of the revenues, and then we're looking for the mobile program to really pick up very late this year, and get more focused for a '98 time frame.

Motorola introduced its StarMax Mac OS compatibles in September, and augmented lineup in November. Have sales met your expectations?

Yes, sales have met our expectations. We announced September 17, and our first shipping date was around October 30. We were late in getting the operating system from Apple, but we have exceeded our expectations. We shipped over 56,000 units in a very short time frame, and we want to continue that ramp. So, it's meeting and exceeding our expectations.

We've got Mitsubishi signed up for exclusive distribution in Japan: we're pleased to have them on board. We feel that the Motorola brand name, the Mitsubishi brand name, and their knowledge of the electronics marketplace is a strong partnership for moving this class of products in this space.

Do you plan any more tie-ups in Japan?

Curry: Right now it's just Mitsubishi, and we're very pleased with that decision. We feel that they're going to move ample volume for us. If they want to sign up sub-licensees they can, but right now we're exclusive with Mitsubishi.

What are your expectations for Japan?

Curry: We see it as an interesting marketplace, and we think that we're going to be fairly successful here. The reason for that is we see it as a growth opportunity for Mac compatibles. Japan is a very active market for Macs and Mac compatibles. That's part of our reason for opening a manufacturing facility in Nanjing, China, to help facilitate manufacturing. We want to leverage that since we see the Japanese market as a true growth opportunity for us. Anything we do in the States will be cloned and done out of the Nanjing factory as well.

What are the basic differences between a StarMax computer and a Macintosh?

Curry: We have a few features that are a little bit different. We have ATAPI CD-ROMs and EIDE hard drives, which is different from a real Mac, which is typically SCSI based. That helps us achieve a lower cost point, and a lower price point to the marketplace. We also offer an SVGA video connector, and PS2 mouse and keyboard ports. The feature set is similar, but those are the main features that are different.

So we're very competitive, and we're the first ones to market with the Tanzania design that we licensed with the option to sublicense the OS and the motherboard. We were first to market with that design; Apple is now bringing that out worldwide as the PowerMac 4400.

All your Mac compatibles now are desktops. Are there any laptops in the future?

Curry: We're looking at a laptop program, very late this year, but it's for a '98 time frame. You'll definitely see a mobile product. Apple has been reluctant to license the laptop OS, and that's one of the issues that we're working on. We're in significant discussions with Apple. With the Motorola brand name, and our knowledge of wireless cellular technologies, we know that space fairly well. What we want to do is bring together the best of both worlds: their operating system with our wireless technology into a single product.

To what extent does Apple offer its cooperation and support?

Curry: We've gone through the Apple certification program. We shipped 350 or 400 units to Apple, which took it through the complete EDT cycle (software/hardware compatibility testing). And we did the same thing in Tempe with 150 systems. So all the testing up front was done by Apple and Motorola before we brought the product to market.

We had several ROM revisions and several OS revisions. That's the reason for the September 17 announcement versus the October 30 shipment date slippage.

How will Apple's problems and recent reorganization affect Mac compatible market?

Curry:The Mac market is in a state of change. I think with Steve Jobs coming back in, you're going to see some radical changes fairly quickly. That's a welcome change to the Mac marketplace. I think their new operating system strategy is going to clear a lot of questions in people's minds. That will help us, from a hardware perspective, to develop an architecture for the next-generation operating system. In doing that, it's also important to maintain compatibility with the existing set of applications, and carrying that forward as well.

So, it's a time of turmoil, but we think it's going to be a change for the better. Their selection of NeXT as an operating system is a very good one: it's got multithreading, multitasking, true SNP capabilities, Web objects, and object orientation such that you can build things quicker in that type of environment. For the Mac, that's good news.

There's going to be a slowdown in the market; we're seeing that now, and will see more of a slowdown in the second quarter. But I think you'll see it picking back up in the third quarter and fourth quarter. I think you'll see a good Christmas season this year, with some very exciting products.

Is the StarMax distribution primarily corporate or consumer?

Curry: We've got the product line focused on 603e-based microprocessors, which is StarMax 3000, and the 604e-based product line, which is StarMax 4000. The 3000 is targeted at the 180-MHz or 200-MHz Performa class of user, so that could be a consumer space, or it could be a retail space, or a small-office/home-office environment. As opposed to the 4000, which is higher performance and more focused at the Fortune 2000 or the enterprise consumer.

In terms of the distribution, we've got a two-tier distribution model. We have master distributors that resell to VARs [value-added retailers] and resellers. Mitsubishi is our master distributor in Japan.

Are your products localized?

Curry: Yes, it's localized for the Japanese market. One of the things we're doing differently in the States versus Japan is that in the US we bundle a modem and applications on the 3000 product line. We don't do that here in Japan because there are homologation issues with the modems, and there's a different communications infrastructure. We took a North American-centric approach with the licensing of all the applications we bundle in the States. We're looking to address that for the Japanese market.

How do you handle market introduction?

Curry: Typically, it's the US first, and then we have a 45 to 60 day window before we get the localized version for KanjiTalk. So we do the worldwide announcement in the US, and whatever our pricing is at that time we just convert it to yen.

Do you compete primarily on price or quality?

Curry: We're trying to compete on several different fronts. Price performance is one of them, with the Motorola brand name and a five-year warranty, we're really putting our money where our mouth is. We have a good product that's been co-developed by Motorola and Apple, so we feel it's a very stable, secure environment. We really want to compete on price, which we do at the low end of the market, but then we also compete at the high end.

Can you describe the relationship between Motorola headquarters and Motorola Japan?

Curry: Japan gets the strategy from us out of Tempe, and if there's a disagreement on the strategy, it's open for discussion, because it is a different marketplace. So there's room for options from the Japanese market. If they want to take a different pricing strategy, they can. We talk daily, and it's a pretty open communication.

What are you market share goals for Japan?

Curry: We would like Japan to be 1% of the overall Macintosh revenue by 1998, and then we'd like to grow that to 5%, or even 10%. We want to be incremental; that's why the focus on small-office/home-office, and more on the enterprise marketplace, because Apple's not really that focused on the enterprise.

What have been the most significant changes in the PC marketplace recently?

Curry: Changes are getting very rapid. It's hard to keep up with the feature sets. CD-ROMs are changing very rapidly, memory configurations are changing rapidly, memory prices are fluctuating, standard monitor sizes are changing... it's pretty aggressive, so we have to be pretty careful in our inventory and forecasting so we don't get caught with a boatload of 8X CD-ROMs if the market moves to 12X.

The thing that's interesting about the Mac space versus the Wintel space is that we have very little competition. Today, you have about five makers competing, though that may get more aggressive as we move through '97 and on into '98, with more licensees and sub-licensees, from Apple or from Motorola. So the Mac space is pretty easy to compete in, in terms of feature set. Very specific target markets.

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