Apple's Persuasive Arguments Against Psystar, End Could be ...

Discussion in 'MacBytes.com News Discussion' started by MacBytes, Nov 12, 2008.

  1. macrumors bot

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    #1
  2. macrumors 65816

    zombitronic

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    #2
    "At issue is Psystar's counter claims is that Apple has a monopoly in Mac OS X and they should be allowed to compete in that market. The claim is similar to a claim that General Motors has a monopoly in its Buick "brand" and that other companies should be able to copy and sell Buicks."

    This was obvious from the beginning. Good night, Psystar.
     
  3. JNB
    macrumors 604

    JNB

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    #3
    Reading through some of the briefs & filings, it sorta appears that Psystar takes the same approach in hiring counsel that they do in selling computers. Or, they have competent counsel that just has to deal with a pile of poop and trying to convince the court that it really smells lovely.
     
  4. Guest

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    #4
    Exactly. I just look forward to seeing those stupid opportunistic pirates in the mud. In fact, they have stayed afloat for much longer than could be reasonably expected.

    Show no mercy and make them go the way of the dodo, Apple. One copycat was enough in MS already.

    Easy money and free-riding? Try being a 419 scammer.
     
  5. Moderator emeritus

    mkrishnan

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    #5
    Actually, though, this particular argument seems to be legally almost completely irrelevant.

    In essence, to continue the analogy, the argument is not that Psystar is asking to compete with GM in the Buick brand, but that they are claiming that roads are only open to the Buick brand. The precedent says, in essence, this is fine, as long as there are many roads between the places people go that are not only open to Buicks.

    A stretch, because it was a bad analogy to begin with, but there's a big difference between what this lawyer said and that first quip in the article: According to the quip, it would never be permissible for Psystar to ask for this kind of competition. Competitors to Kleenex can make their own tissue paper, but they cannot make "Kleenex," irrespective of the market dominance of this product, because that's brand infringement.

    Here, the issue is not brand infringement, but market dominance. According to the comments of the lawyer, Psystar's position would become tenable if Apple were to attain a >30% market share. But it is not now because they do not now.

    That's vastly different.
     
  6. macrumors 6502a

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    #6
    You say this as if Psystar is not promoting healthy competition. Why not be more forward? Please, Apple, maintain a complete monopoly. For the love of god, do not allow choices and price wars for the benefit of me and other consumers out there.

    In relation to Psystar, Apple makes two things; hardware and an OS. Psystar is not cloning Apple parts, or their image. They are simply placing the OS on different and more competitively priced hardware. Additionaly, they don't claim to be selling "Apple Computers" or "Macs". Thus, the Buick analogy is weak and poorly thought out.

    To say good night to Psystar is rather sad in and of itself. Apple has enough money to fight for itself; their cheerleaders on the side don't even know what they are cheering for.
     
  7. macrumors member

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    #7
    If psystar can hold out a bit longer, then they can start arguing what "market share" really means. If Apple manages to sell 30% of unit PC's in the US for a quarter, would that represent 30% market share under this definition?
     
  8. macrumors 6502

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    #8
    Doubtful. I think we're talking installed base, which will continue to be in the single digits for a very long time.
     
  9. macrumors G5

    nagromme

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    #9
    If Apple were to license their OS to other companies, it could go in one of three general directions:

    1. Apple specifies every single component and internal design factor, so that every Mac clone is IDENTICAL (except in outward appearance) to a specific Apple model, or else identical to specific new config(s) that Apple creates for third parties to follow. No significant choice of models is likely to be added to the market--and the clones would probably cost more, since they'd use the same parts as Apple, but bought in smaller volume. But if you prefer a non-Apple outer design, you'd have some choice in that. (Unless Apple had to dictate that as well, for cooling.)

    OR

    2. Apple sells the OS "as is," made for their OWN Macs, and therfore not every OS feature and update actually works on clones. Your clone Mac may simply stop working or have annoying glitches at any time, because some Apple update is not specifically tailored to the hardware that Psystar or some other company is using. Maybe your fans start to fail? Maybe iCal won't synch over Bluetooth every time? Maybe Disk Utility doesn't see all attached volumes? Who knows. An OS and its bundled utilities are a huge and complex system, prone to breaking when you complicate the hardware (just ask Microsoft). These other companies' customers would blame Apple for this risk, and they'd blame Psystar for hiding this risk in the fine print. Buy a Mac-clone and it will probably work today. But will next week's updates work on it? Maybe. Is that good enough for you?

    OR

    3. Apple actually SUPPORTS these other companies and their customers. Apple spends MASSIVE time and money TESTING their OS and updates for non-Mac hardware, and then FIXING any issues that arise, all for the benefit of companies like Psystar. In this case, if an update breaks on some certain Mac clone config, Apple will be partly responsible. This will hurt OS X in two HUGE ways: first, it will add bloat, complexity, and therefore bugs (again, ask Microsoft) since the OS now has to be aware of and compatible with other hardware and other drivers. Second, it will SLOW DOWN Apple innovation, due to all the extra testing and debugging needed. Does anyone think Snow Leopard would actually get done in the the same amount of time if it were being tested to work on random non-Apple clones? And throwing more programmers at the problem doesn't make it go away: Google the "mythical man-month" (and again, see Microsoft).

    Which of these 3 paths are Psystar supporters hoping for? More choice IS good, certainly, but does anyone truly deny that it would come at a price?

    Here's the choice I want:

    I want to be able to choose an OS and hardware designed TOGETHER. If you want them to be separate, Microsoft has an option for you. But please don't take away MY choice to have them united. The benefits of that are real.

    Do people think that having an OS and hardware specifically designed together is a choice that should not exist in the market?
     
  10. macrumors 65816

    zombitronic

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    #10
    Maybe the analogy can be picked apart. Take that up with Apple Legal. The bottom line is that Apple is not a monopoly, but we'll let the courts prove that. We've already had many forums of debate over this. Your choice, if you chose not to use Mac OS X, is to use Linux or Windows. Where's the benefit to you if Apple has to serialize OS X and charge you $400 for it in order to protect their profits?

    Psystar has done nothing for healthy competition. If Psystar was actually about healthy competition and not just leaching, they would pick up a Linux distro, improve upon it and sell it as their own OS. Psystar has created NOTHING ORIGINAL. There's nothing healthy about that.

    I know exactly what I'm cheering for. AAPL.
     
  11. Moderator emeritus

    mkrishnan

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    #11
    I don't know which case the 30% bogey comes from, so I'm not sure myself, but it's probably something that becomes debatable by the time new sales marketshare reached 30%. Psystar doesn't really compete with an Apple computer that's already sold and might upgrade to a new operating system -- whether that computer gets Windows, OS X, or Linux on it has no bearing on Psystar's ability to market. Psystar competes in the market of new computers sold with an OS preinstalled. So the argument is that they can sell any number of the 85 or whatever computers out of a hundred that are not sold with OS X, making the 15 that are sold that way irrelevant.

    I think the argument could also be made that the appropriate metric is neither new computers sold nor existing computers but something like share of OS licenses sold (inclusive of new computers). The logic would be that, particularly in a saturated market, a consumer evaluates multiple options such as... install a new OS on existing hardware, buy new hardware with Windows, buy new hardware with Linux, buy new hardware with OS X, buy new hardware and use the old license, etc. Right now, Psystar can compete in the subset of cases where a person buys new hardware and runs Windows or Linux or buys new hardware and uses their old license of Windows (or Linux), but they cannot compete in the buy new hardware and use OS X category, or the non-existent buy new hardware and use your old OS X license category.

    I think it could all get very messy... and quite possibly re-evaluated if Apple continues to rise.
     
  12. JNB
    macrumors 604

    JNB

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    You're missing the entire point. Apple does NOT possess a monopoly, period. Being the only maker of OSX does not rise to that definition. Nor does restricting the licensed use to only Apple-branded PC's. Apple sells the hardware and the OS as a complete system, not as separate components designed or intended to function independent of one another.

    If you want OSX on a beige box, go right ahead, but it's up to you as the end user to accomplish it, and Apple will have no problems with it. But if you want a pre-made PC to do it, then buy an Apple. Those are the choices.
     
  13. macrumors G5

    nagromme

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    #13
    I can certainly understand why people would WANT there to be no downside to cloning. And why they'd WANT the law to force Apple to become more like Microsoft. Choice sounds great! I'd love to see a netbook, minitower, whatever clone companies might come up with! Nobody would deny the upside of that.

    But the reality is that there IS a downside too--a big one (see my trilemma above)--and the law probably won't force Apple down that road. What we WANT is not always doable in practice.
     
  14. Moderator emeritus

    mkrishnan

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    #14
    Path two is really essentially what Apple does about unlocking iPhones. This path in essence works fine as long as its a market minority and doesn't have a positive perception from customers. If corporate customers started buying from Psystar, or if people started generating a miasma of ill will towards Apple because their Psystars (or xxx clones) didn't work properly, and this eventually became a dominant enough theme that people thought of it as Apple's fault, then Apple would suffer from it.

    So yeah, this path basically works except that it's a dangerous slope potentially for Apple.
     
  15. macrumors 6502a

    cohibadad

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    #15
    We all play by rules. In this case, it's legal rules. Healthy competition isn't taking someone else's intellectual property and using it to make a profit yourself. And Apple doesn't have a monopoly. You shouldn't have to be an Apple cheerleader to encourage fair play and justice. If you were in Apple's shoes and someone used your intellectual property as Psystar has you'd be crying to high heaven how wronged you were instead of praising them for healthy competition and offering choice.
     
  16. macrumors G5

    nagromme

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    #16
    Agreed--those "workaround"/"hack" niches are fine for hobbyists, and I like that such options exist! Here's to the crazy ones. But that path is not suitable for most people.
     
  17. macrumors 68020

    jayducharme

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    #17
    Right. And then we have Windows.

    How is Psystar getting Leopard on their machines? Do they just buy legit copies and then install them? If that's the case, it might be a sticky legal question as to whether the company is doing anything that the law can prevent.

    But I can certainly see how this would ruffle Apple's feathers. Apple has prided itself in integrating its hardware and software seamlessly for a unique and stable computing experience. Psystar could toss all that out the window simply to offer a lower price. That would be akin to taking a Rolls Royce engine and sticking it inside a Yugo, claiming that it really was a Rolls Royce. The engine might be the same, but the overall experience will probably be much different.
     
  18. macrumors regular

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    #18
    Didn't Apple sue on the grounds of copyright infringement?

    "The Mac maker filed a formal complaint in the U.S. District Court for the Northern District of California on July 3rd, just one day after Psystar began distributing a modified version of the Mac OS X 10.5.4 Leopard update to customers who had previously purchased one of its unauthorized Mac systems."

    http://www.macrumors.com/2008/07/15/apple-sues-psystar-over-opencomputer/

    Psystar countersued Apple for anti competitive practices.

    http://www.macrumors.com/2008/08/04/psystar-lawyer-hints-at-anti-trust-defense/

    http://www.macrumors.com/2008/08/27/psystar-to-countersue-apple-for-anticompetitive-practices/

    Copyright Infringement
    Psystar is guilty as charged. They probably will try to count each download of the modified update as one count of infringement. Depending on the fine per count, Psystar could be bankrupt on this one charge. Downloads might be hard to prove, so maybe they would base it on number of copies of Leopard sold by Psystar.

    Anti-Trust
    A company automatically has a monopoly on their products because they are the only ones that can produce them. There is no "Mac OS X" market...the market is operating systems. The only thing they could get in trouble for is "illegal bundling" or "illegal tying" of products together.

    http://en.wikipedia.org/wiki/Tying_(commerce)

    "Success on a tying claim typically requires proof of four elements: (1) two separate products or services are involved; (2) the purchase of the tying product is conditioned on the additional purchase of the tied product; (3) the seller has sufficient market power in the market for the tying product; (4) a not insubstantial amount of interstate commerce in the tied product market is affected."

    Even if Apple if found guilty of tying, they don't have to sell OS X at a reasonable price. Just like Apple did with the iPhones in Europe, iPhone with no contract is 999 euros. They could sell copies of OS X to Psystar and the public for $999.99 with no support. This would effectively eliminate Psystar or any other clone maker.

    This will be an interesting case to follow. Apple might have to settle for less than 25% margin on their computers if Psystar wins.
     
  19. macrumors member

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    #19
    Why don't you get Psystar to develop their own OS, and sell it with their own computers? :rolleyes:
     
  20. macrumors 68030

    Winni

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    #20
    According to former articles, Psystar purchased fully legal copies of OS X and then installed patched versions of these on their computers on behalf of their customers. So Apple got money of each and every sold Psystar machine, and all that Psystar did was providing the service of creating a so-called "Hackintosh" system.

    I think Apple's claims for copyright infringement are on very thin ice here. However, both sides have to use some fancy legal arguments to make their case.

    The point is that Apple wants to force all of its customers into purchasing Apple hardware to use OS X, which can also be bought separately and without any hardware bundled to it (on Amazon, for example).

    Psystar now offers a hardware that is compatible to this Apple operating system and provides the service of installing it on their compatible hardware.

    Apple says that this is copyright infringement to defend their monopoly on providing hardware for their software.

    And this is exactly what Psystar claims: That Apple uses anti-competitive techniques to prevent others from entering the OS X market.

    It's quite obvious that Psystar's argument is sound, and it is also obvious that this is not in the best interest of --US-- customers.

    You're afraid that OS X becomes like Windows when it officially has to support non-Apple hardware? Seriously guys, you bought into too much FUD and don't know enough about software development and system architectures if you actually believe this. Besides, since the introduction of NT, Windows is a rock solid operating system when maintained properly. Saying something else is also FUD. But it is true that OS X and its BSD foundation use an even safer and more robust architecture, and BSD Unixes run on even MORE different hardware platforms than Windows (just check out NetBSD).

    By the way, what I see in my Mac Pro is not much different from what I see in the Dell Precision Workstation at work. Apple uses standard Intel, AMD (ATI) and nVidia components that EVERYBODY can use in their computers. The days of proprietary Apple hardware are long over. There is nothing special in a Mac these days that is relevant for the performance of an operating system and that no other hardware vendor offers.

    You think that it will become more expensive if Apple is going to do what Microsoft has already been doing for DECADES: Certifying hardware for their software? That's another joke. Every vendor selling a piece of hardware that has a 'certified for Windows' logo on it had to pay for it, and strangely enough, neither Windows (Systembuilder versions) nor PC hardware are more expensive than Apple computers and OS X boxes. Actually, Microsoft makes a lot of money with these logo programs - it's a source of income for them, not costs. Red Hat and Oracle have similar programs, by the way. It's common business practice.

    Would this affect Apple's hardware business? Sure. A company like Dell sells low-end machines that do not compete with Apple, but also high-end systems with enterprise support that Apple also does not offer today. And they sell large amounts of mid-range systems, where Apple is today, and that might hurt them. Or maybe not, because Apple's current audience mostly buys Macs because of their design and not because of their specifications.

    Would this be a problem? You know what? I don't think so. On the long run, Apple would make even MORE money than they do right now. There are many people out there who would buy and use OS X and other Apple software in a heartbeat, but who would -never- purchase Apple hardware for many individual reasons. Costs being one and the fact that you cannot customize your own hardware being the big other reason.

    What would you say if Microsoft said that Windows would only be allowed to run on a "Microsoft certified computer"? Oops. Forget BootCamp, Parallels and VMWare Fusion. You would be violating the EULA by installing Windows on a Mac. And you would be hating Microsoft even more. But this is -exactly- what Apple does. But strangely enough, that business practice all of a sudden is okay for all the Apple zealots around.

    Es ist eben nicht dasselbe, wenn zwei das Gleiche tun.

    The only reason why Apple is not opening OS X to other hardware vendors is Steve Jobs's ego. There is no business argument for that decision.
     
  21. JNB
    macrumors 604

    JNB

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    #21
    Sorry, you lost that one on the first paragraph. You even restated the infringement yourself (in boldface). That is the definition of infringement. An individual could do this on their own, but an enterprise such as Psystar can't, and certainly not to resell.
     
  22. macrumors regular

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    #22
    Apple isn't claiming copyright infringement because Psystar is installing Leopard on non Apple branded machines. Psystar hosting a modified 10.5.4 update that it distributes to its customers...that is the basis of the copyright infringement case.

    You can't take a copyrighted work and distribute it on your own without permission of the copyright holder, even if the work is freely available. The Apple keynotes website was shut down for the same reason...the keynotes were copyrighted material and the owner of the site didn't have permission to distribute them.

    Apple will probably have to prove that they were damaged in some way for the claim to stick. The only damage claim I could think of is Apple saying that if this modified 10.5.4 update was installed on a genuine Mac, it could have caused problems for possibly millions of customers. Imagine the support costs if that would happen. The chance of that happening is pretty small considering most users use Software Update, but all Apple has to do is convince the judge.

    Pretty open and shut if you ask me. The anti-competitive countersuit...different story.
     
  23. macrumors 68040

    matticus008

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    #23
    Not at all. One of Psystar's arguments is abuse of market power, which only exists if Apple computers are the only brand that exists in the market. It is not. No matter how distinctive the brand, be it Maserati or Bentley or SMART, a "monopoly" in your own brand is not a monopoly at law.
    That's a tortured and inaccurate analogy, though. It's not about roads, or gas, or any other external supply. They're claiming that certain Buick products are only made available to owners of Buick cars. That is the continuation of the analogy, if you must go there, and it's not legally problematic.

    You're mixing things that ought not to be mixed. "Brand infringement" by which I imagine you mean trademark infringement is not involved or referenced. The scope of competition is referenced, and market "dominance" has a role in that. Psystar is absolutely free to compete with Apple hardware on its merits. It's free to select, customize, or create an operating system that competes with Apple's. It's free to combine that hardware and software in a manner it sees fit. But the appropriate scope of competition does not include the appropriation of Apple's exclusive rights in OS X in order to sell Psystar's hardware.
    There is no monopoly. There is no such as "healthy competition" with your own products.

    They have no legal right to place the OS on any hardware. They trade on Apple's software in order to sell Psystar hardware, which is taking commercial advantage of something that is not theirs to exploit. The Buick analogy is neither weak nor poorly thought out, but simply misunderstood by the laity.
    It doesn't come from a single case, but rather the homogenization of data points from all the major players. In essence, a firm cannot under ordinary circumstances acquire market power short of about 30% market share.

    What?
    No. The only legally useful metric is market share in the tying product--the hardware.

    Psystar purchased boxes via legal channels. Anything subsequent to that is illegal.
    That's not a monopoly.
    It is anything but. Having any knowledge of what American competition law is, actual knowledge of copyright law, and the relevant economic factors in play would be helpful before making broad proclamations with no basis in fact.
    There are several business arguments for that decision, and the fundamental legal argument is quite straightforward: his product, his decision.
    Psystar's argument fails all three practical elements of tying, with the possible exception of the "two product" prong, because courts often get confused about how to apply the current test.
    Well, it must be a reasonable price, but the actual standard for that is fairly low. It could easily charge $500 for OS X to Psystar, which would roughly eliminate any price advantage--but this is exactly the point. Psystar only gets to offer a price advantage because they don't have any of the costs associated with OS X development or support.
    No, at worst they'd simply have to settle for product activation, DRM, and increased OS X distribution complexity. Even a victory does not mean that OS X will be available to everyone, but only that Apple has to change its method. If they don't want to license, they won't.
    Actually, it's both, in addition to a number of others.
     
  24. macrumors G5

    nagromme

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    #24
    I don't really care whether Psystar is allowed to keep going or not--just so long as Apple isn't forced to pay Psystar any attention when it comes to developing and testing their OS. As long as Psystar is selling an UNsupported OS, there's no harm done. Except to Pystar's customers--but that's their choice I guess.

    So you would assert that if Apple officially designed and supported OS X for a wider number of models (their own PLUS other companies'), this would NOT add any additional testing or debugging time? That's absurd, since it's clear that even their OWN models add testing and debugging time. That's obvious when we sometimes see an OS X bug that affects only certain systems and not others. The more machines and configs Apple must test for that kind of thing, the more time and money they are spending to do so. That is a REAL cost, and it would indeed slow down Apple's ability to deliver new versions of their OS (which in turn affects their hardware development, app development, you name it).

    And on the flip side, if Windows only ever had to run on a handful of specific configurations, all designed BY Microsoft in conjunction with Windows itself, then Windows would be a lot easier for Microsoft to maintain and innovate with.

    Choice has a very real cost.

    (And when you say "when maintained properly," that suggests that you're talking about effort from USERS, not from the OS developers, which is the point I was discussing. I don't think anyone would deny that Microsoft spends more development hours and dollars on Windows than Apple spends on OS X--and still ends up behind in their ability to deliver innovation, usability and quality. And part of why they're so behind is the chaos of hardware and drivers they have to deal with. One of the prices of "choice.")

    Your own zealotry may be making you see what you expect to see ;) I for one DO see the value of choice in hardware, and DO regret that we don't have that. I just happen to ALSO see the benefits of keeping the OS and hardware as a single product, co-developed together. And I like that choice.

    If Microsoft were to switch to Apple's model, and it made their product as GOOD as OS X, designed hand-in-hand with hardware and offering real resulting benefits, THEN it would be "exactly" what Apple is doing--and there would be some value to that scenario, along with the obvious downsides. I'd still complain: because right now Microsoft provides a DIFFERENT business model, and I like that we have that choice. In that regard, I wouldn't want to see Microsoft become like Apple, and I wouldn't want to see Apple become like Microsoft. I don't want to lose the CHOICE to have my hardware and my OS designed together.

    As long as Apple's OS team isn't forced to SUPPORT Psystar hardware, I'll be pleased :)
     
  25. macrumors 6502

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    #25
    Hmmm, how many businesses have you taken from the verge of bankruptcy, made them one of the most recognizable and successful in their industry, eliminated all debt, and put billions in the bank? If your answer is 0, then what is your logic for believing you know business better than Steve Jobs? I understand that you would like more options from Apple, more frequent product updates, and like all of us much cheaper Apple products, but you can't argue with Jobs business acumen. If Steve Jobs believes there is a business reason for not opening OSX to others, then I will trust him long before I trust you.
     

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