The explanation I have always heard is that the margin on the software license (for OS 7) was not high enough to make up for the loss in hardware profits. The

The explanation I have always heard is that the margin on the software license (for OS 7) was not high enough to make up for the loss in hardware profits. The problem was exacerbated because the clone makers were targeting the high-margin top-end of the Apple line. (In other words, pretty much what the parent comment said.) E.g., this blog entry (skip down to "Amelio") -- http://blog.adamnash.com/2008/04/16/reminder-why-apple-killed-clones-in-1997/ http://blog.adamnash.com/2008/04/16/reminder-why-apple-kille... Here's Jobs on the subject, indicating it was unwillingness of the clone makers to accept higher license fees: http://www.youtube.com/watch?v=maIgu_7oLm0 http://www.youtube.com/watch?v=maIgu_7oLm0 Of course, just because Jobs is saying it, you can't know if this is the whole story.