Buying Cheap Mac Clones – Does Apple Tie Software Contracts to Selling Hardware Contracts?

mac






15 years ago, Macs were still sort of luxury goods. Even a low-cost model called LCII cost more than US$3,000 with a 13-inch monitor. iMacs are relatively affordable these days. You can find an iMac 2.8 GHz Core 2 Duo like ours for US$1,500 to 1,600 at online stores.

How about Mac Pro? Or why would you want Mac Pro as opposed to iMac in the first place? One good reason is that you want to extend your machine with a better video card and additional internal hard disk drives. Mac Pro isn’t so cheap, though. According to Apple Store, an entry Mac Pro machine equipped with two 2.8 GHz Quad-Core Intel Xeon chips, one 2 GB DDR2 memory card, a 320 GB 7200 rpm hard disk drive, an ATI Radeon HD 26000 XT 256 MB video card and more costs US$2,799.

So some Mac users assemble computers on their own in the name of saving money. I’m sure there are many local custom build shops where they can put parts including a Mac-compatible logic board from ASUS, Gigabye or others, a power supply box, a cooling fan and more together for you. But they are unlikely to install Mac OS on your custom machine with your request. So you will be on your own to customize BIOS (ROM) settings and go underground to obtain revised Mac OS installation discs.

Or get an Open Computer from Psystar Corporation (hereafter, Psystar)? Southernmost Florida-based Psystar is one of the first companies officially accepting orders online for Mac OS-running PCs with Intel processor. According to its website (http://www.psystar.com), Psystar says






The Open Computer is a PC that works just like a Mac with Apple’s latest operating system OS X 10.5 a.k.a. Leopard. With the Open Computer you can run OS X natively as if you had purchased an expensive Apple computer except that, while paying less, you receive more. (See Screenshot 01.)






Actually, the company doesn’t necessarily guarantee that their computers can run all software programs intended for Mac OS, by stating






… Psystar does not guarantee that each and every program and feature will operate correctly as the Open Computer and/or OpenPro is not supported by Apple Computers. … Psystar does not guarantee that any of your peripherals, Apple-related or not, will function correctly. Psystar will not be responsible for your usage of the Open Computer and/or OpenPro in any way. (See Screenshot 02.)





Psystar Mac Open Computer
Screenshot 01- Source: Psystar
Psystar Mac Open Computer
Screenshot 02- Source: Psystar
Psystar Mac Open Computer
Screenshot 03- Source: Psystar






Psystar’s name first went around several months ago. So their selling Mac clones is not a new story. We are aware that Apple, Inc. sued Psystar at the beginning of the last month in the federal district court for copyright infringement and other charges. Now, according to CNET News, Psystar has filed a counter-lawsuit against Apple partly for violations of antitrust law. Interestingly, the company has created a page under Company titled Litigation possibly to document their court battles with Apple although the page itself is empty for now. (Screenshot 03.) 

By the way, let’s see what Psystar offers quickly. One model is called OpenPro Computer. According to Psystar, a default US1,154.99 model comes with





  • Mac OS X Leopard installation disks
  • 2.4 GHz Intel Core 2 Quad Q6600 Processor
  • 750 GB 7200 rpm SATA internal hard disk drive
  • 1 x 2 GB DDR 800 memory
  • 512 MB nVidia GeForce 8600GT video card
  • 20x DVD+/-RW SATA drive
  • Gibabit Ethernet
  • 8 rear USB ports





  • (See Screenshot 04.) By the way, this model doesn’t include





  • Mouse, keyboard, monitor
  • Wireless Ethernet card
  • FireWire ports
  • USB Bluebooth





  • Also, we don’t know if OpenPro Computer comes with a cooling fan. Anyway, compared with Mac Pro, this model is affordable. But it’s doesn’t necessarily run Mac applications faster than iMac 2.8 GHz does. OpenPro Computer comes with 2.4 GHz Intel Core 2 Quad Q6600 Processor. But the truth is that not many Mac applications utilize all components of a quad-processor.





    Psystar Mac Open Computer
    Screenshot 04- Source: Psystar
    Psystar Mac Open Computer
    Screenshot 05- Source: MacHouse
    Psystar Mac Open Computer
    Screenshot 06- Source: Biznesshosting (Volico)






    What is Apple’s copyright infringement claim all about? Screenshot 05 is a scanned copy of Apple’s software license agreement for Mac OS X Leopard. It doesn’t take a high-power lawyer to figure out that Psystar’s business practice is likely to violate this software license agreement. Under Section C, the software license agreement says






    Apple Boot ROM code and firmware is provided only for use on Apple-labeled hardware and you may not copy, modifty or redistribute the Apple Boot ROM code or firmware, or any portions thereof.






    Also stated under Section D of the software license agreement is






    Certain components of the Apple Software, and third party open source programs included with the Apple Software, have been or may be made available by Apple on its Open Source web site… You may modify or replace only these open-Sourced Components; provided that: (i) the resultant modified Apple Software is used, in place of the unmodified Apple Software, on a single Apple-labeled computer…






    In response to Apple’s allegation for copyright infringement, Psystar seems to want to solve this issue in light of federal antitrust law. U.S. antitrust law consists of several pillars. One of them is Clayton Antitrust Act. And one of the provisions is prohibition of tying contract. That is, Psystar wants to say that Apple’s software license agreement itself is the source of the problem and precludes fair competition.

    What are tying contracts, anyway? A tying contract takes place when a person is forced to make another contract unwillingly for his or her wish to fulfill one contract. Here is one example. About 8 years ago, I wanted to purchase an atomic clock from Oregon Scientific on a catalog. They said that I had canceled my account at one store. I didn’t know that two companies were related. Anyway, the catalog company refused to sell a clock to me. Another example… How about Apple’s Motion? Or DVD Studio Pro? Even if I wanted only Motion, I would have to pay for the entire package of Final Cut Studio. That’s NOT a tying contract. Actually, Apple was selling DVD Studio Pro, Motion and other pro software products separately till a few years ago. If owners of Motion were forced to upgrade the entire package of Final Cut Studio merely to upgrade their software, that could be a tying contract.

    Anyway, let us concentrate on Psystar. Does Apple illegally tie contracts for software to selling contracts for hardware? It is obvious that Apple ties software contracts to selling hardware contracts. It’s only a personal opinion, but I won’t say that this practice is illegal. Is SONY required by law to design Playstation 3 such that it can also run game DVDs for X Box 360?

    Usually, it’s the government that pursues antitrust law violations, right? For more than 2 decades, Apple has been exclusively selling computers in which their OS software runs. How come the U.S. government hasn’t sued Apple for fair competition if there are such violations, then? Is the U.S. government so busy to go after Microsoft that they’ve decided to let Apple go?

    I’m a former economist, not a legal analyst of any kind. So I can’t say if Psystar’s unfair competition claim is valid. But if a judge decides that Apple’s copyright infringement claim is valid, then will Psystar be able to finance years of legal battles? How many units of Mac clone computers does Psystar have to sell to cover their legal costs?

    Finally, it’s our job to find out which website is hosted where. So let’s quickly find out who is the host of Psystar’s website. The web server of this website appears to have to the IP address of 208.68.239.90. This IP address belongs to an organization in Florida called Biznesshosting, Inc or Volico Web Consulting in case you wanted to know… (Screenshot 06 shows the index page of Volico’s website.)






    References:

    Pystar countersues Apple on antitrust grounds
    Wikipedia: Clayton Antitrust Act

    This entry was posted in Apple & Mac. Bookmark the permalink.

    Leave a Reply

    Your email address will not be published.

    Notify me of followup comments via e-mail. You can also subscribe without commenting.