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What's to stop someone from stealing a Mac, and on the first boot putting an install disc in and completely wiping the operating system?

If someone did that it would have no ties to anyone's iCloud and wouldn't be trackable or controllable.

Just saying, none of these services really protect you.

Usually these great bits of software come with a locking service, you lose the Mac? Lock it, stop installs, formats and nearly every other bypassable method.
 
A firmware password. You can't wipe and reinstall the OS if you have a firmware password set.

you can quite easily bypass the master password. I had to do it on my old Power Mac G4 tower after the previous owner set one and forgot it as I wanted to upgrade from Jaguar to Tiger.
 
I wouldn't make a huge deal about my stolen Mac. If it was stolen, it's just an excuse to buy a new Mac ^.^ All of my important files are on an encrypted and backed up RAID system.
 
How does it track it? Wifi? Ethernet? What if they don't connect to the Internet? How do you track it to the apple store if you have no Internet connection?

Edit: I see it phones home when connected but I still don't know how it would "track" it to a store. I don't know but my location accuracy in google maps is never good anyway, the pics and key logger is a good idea though.
 
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you can quite easily bypass the master password. I had to do it on my old Power Mac G4 tower after the previous owner set one and forgot it as I wanted to upgrade from Jaguar to Tiger.

With a new Macintosh, there is _no_ way for a normal user anymore to reset the Firmware password if it is forgotten. Except going to an Apple Store, talking to the resident Genius, convincing them that the Macintosh that you brought is yours (proof of purchase, your passport etc.) and then they can boot into the Firmware screen, copy a number that is displayed, send it to someone at Apple headquarters who will reply with a key that can remove the firmware password. Just don't forget it.

That seems inconvenient, but it is supposed to stop thieves.

Yeah, if your files aren't encrypted, it doesn't matter how secure your account password is. The files are still sitting in your home folder unprotected. You can access them via Target Disk Mode, single user mode (command prompt, hold down Command + S at startup), or if you attach the hard drive to another computer.

Exactly. If your hard drive isn't password protected, I have an empty external drive and a screw driver, I remove your drive, put it into the empty external drive, plug it into my Mac, and I can read everything. Even if you had a firmware password.

Firmware password makes your Mac unusable for a thief. Hard drive password makes the hard drive unusable for a thief. That's actually more important for most people, because you won't get the Mac back anyway if it is stolen, and the Firmware password won't stop thieves from stealing your Mac, because they don't know about it.
 
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