August 26th, 2008

Does Psystar have a legit argument in Apple countersuit?

Posted by Sam Diaz @ 5:43 pm

Categories: Apple, General, Legal, Microsoft

Tags: Car, Apple Macintosh, Apple Inc., Psystar, Apple Mac OS, Apple Mac OS X, Microsoft Windows, Operating Systems, Desktops, Software

Somewhere in the news coverage of Psystar’s countersuit against Apple today, I was reminded of the car analogy I use to help friends and family understand how to buy a computer.

Under the hood of a car, everything is the same. There’s an engine, transmission, battery and some spark plus, belts and hoses. It doesn’t matter if the car is a Mercedes Benz or a Kia. All cars (at least in the pre-hybrid days) worked the same. The major differences were found in the upgrades - more powerful engines, performance handling designs, enhanced safety features and so on. Even the leather seats, power windows and in-car navigation systems are upgrades. That’s why some cars cost more - and often times, perform better - than others.

Take that concept and translate it to the personal computer. Motherboard, processor, hard drive, video card, RAM and so on - they’re all in there, regardless of whether the box says Dell, HP, Sony or even Apple. That’s not to say that all chips and video cards are the same. Some components are faster and more powerful than others. That’s why you’ll see performance PCs souped up for gamers priced higher than a $500 eMachine at Wal-Mart - just like you’ll see Toyota Yaris priced significantly lower than the top-of-the line BMW X5.

And, with the right components and the technical know-how, anyone could build one. I’ve seen dozens of homemade PCs in Silicon Valley homes and have even purchased some RAM and an internal optical drive off the shelf at Fry’s Electronics. And who’s to say I can’t build a machine at sell it at my own price?  That’s basically what Michael Dell did out of his dorm room back in the 80s to start what would later become Dell, Inc., one of the top PC makers in the world.

That’s why I sort of understand where Rudy Pedraza, president and co-founder of Psystar, is coming from when he talks about his suit-countersuit legal battle with Apple. “It’s not that people don’t want to use Mac OS X, but they’re not open to spending an exorbitant amount of money for something that’s essentially generic hardware,” Pedraza said.

Last month, Apple filed suit against the Miami-based company, alleging copyright infringement, trademark infringement, breach of contract, unfair competition and more after Psystar began selling Mac clones - basically white box computers running Apple’s Mac OS X operating system. Apple alleges that OpenComputer runs “modified unauthorized version of the Leopard operating system.” Psystar denies that allegation.

Apple’s complaint against Psystar also notes that Apple has never authorized Psystar to install, use or sell the Mac OS software on any non-Apple-labeled hardware. That’s the part that has Pedraza fighting back. As for the authorization to sell Mac clones cheaper, Psystar acknowledges that Apple makes a good operating system and Psystar wants to bring it to the masses. But, no one should have to pay “exorbitant” prices for it.

Apple’s end-user licensing agreement (EULA) is clear on prohibiting the installation of Mac OS X on a non-Apple machine. Psystar attorney Colby Springer says that amounts to “restraint of trade,” one of the allegations that he wants a court to chime in on. As part of its countersuit, Psystar is asking the court to void the licensing agreement.

In the past, courts have shown interest in antitrust cases that allege “tying,” such as Microsoft’s tying of the IE browser to the Windows operating system. At the time, a large piece of the argument against Microsoft was its market share. Windows was then - and still is - the dominant player in computer software, by far. Apple has no where near the penetration that Microsoft has with Windows, though it is starting to gain share. Though not related, Apple also has been involved in other potential class-action suits over “tying,” these involving the link between the iPod and Apple’s iTunes Music store.

I don’t know that Psystar has the legal legs to stand on in its countersuit and experts warned earlier this year that if Apple is victorious, it could put Psystar out of business. On the other hand, what impact might it have on Apple if the courts rule in favor of Psystar and set a precedent on the matter of “tying?” I guess we’ll have to wait and see how the courts rule.

Apple also alleges that Psystar is doing it harm by selling an inferior product - one that makes noises, has problems with video signals, and breaks down - and linking it to the Apple brand name. When a non-Apple company is selling a Mac clone for half the price of what you would pay in an Apple store, the consumer has to pause and ask himself what risks he’s taking by buying from someone other than the source. Sure, that could come into play in the court proceedings but, until then, I can’t help but think of what my dad - and probably what the wise man of every family - would often say: “You get what you pay for.”