Psystar Spews More Nonsense in Its Bid to Commoditize the Mac

This whole Psystar thing gets more tiresome all the time.

Psystar's latest tactic claims that because it bought its copies of Mac OS X from Apple itself, it has a right to install it on the computers it sells. The company states, "Psystar distributes computers with legitimately purchased copies of Mac OS loaded thereon."

Yes, Psystar has obtained its copies of OS X legally, but that has never been a point of contention. And under the first sale doctrine, Psystar has a right to sell its copies of OS X to anyone at any price. That is not under debate.

Psystar and other Hackintosh makers may have a right to install Mac OS X on their own computers for their own use. To the best of my knowledge, Apple has not claimed otherwise in court, although this does violate the End User License Agreement (EULA).

Psystar has a right to buy OS X, sell those copies, and install OS X on its computers. What it doesn't have is a right to buy OS X, install it on non-Apple hardware, and sell those computers with OS X installed.

It's not an issue of semantics: When Psystar installs OS X, it agrees to be bound by Apple's EULA, which specifically prohibits installation on non-Apple hardware. Psystar may technically be violating the EULA when it installs OS X; it is definitely doing so when it sells a non-Apple computer with OS X installed.

Analogies

When you buy a CD, you have the right to listen to it, to rip it to your computer, to burn its tracks to a personal mix CD, to put the music on your iPod, and to resell the CD. But even there we have limits. You aren't allowed to play the CD as background music in a store without a special license. You aren't allowed sell burned copies of it. You aren't supposed to give away copies of the tracks. And if you do sell the CD, you're supposed to destroy any copies you have. That's how copyright law, fair use, and the first sale doctrine apply.

When you buy a DVD, you have the right to watch it, to rip it to your computer or iPod, and to resell the DVD. You can watch it with your family or a few friends, but you are not allowed to share it in a "public viewing" without a special license. And when you sell the DVD, you're supposed to take any copies off your computer, iPod, etc.

When you buy a book, you have the right to read it, to photocopy it for personal use, and to resell the book. You can loan it out, give it away, or sell it, but you're not allowed to make copies and sell them. And if you no longer own the book, you're supposed to destroy any copies you have made.

That's what copyright law is all about - setting limits on your rights to use the intellectual property of another and otherwise protecting the rights of the copyright holder.

Without copyright, pirated books, CDs, DVDs, and software would be rampant. That's the big issue behind BitTorrent and other sites that share copyrighted material without authorization.

And that's exactly what Psystar is doing - distributing an installed copy of Mac OS X without authorization.

Why Apple May Never Allow Clones

Those who don't understand Apple have been pushing the company to allow Macintosh clones since 1984. They see Microsoft's success and think that Apple could duplicate it. They give a nod to the fact that Apple isn't just a software company, but they don't realize that if Apple were to allow Macintosh clones, it would eventually be pushed out of the hardware market.

Apple has a unique product in the Macintosh. Apple sells the hardware, the operating system, and a lot of very useful apps for it - iLife, iWork, Final Cut Pro, etc. But software is only one aspect of Apple. It makes the bulk of its money selling hardware, and Apple typically has the highest profit margins in the personal computer industry.

Were Apple to license the Mac OS, it would continue to make money from software sales, but given the nature of the consumer market, it would quickly be undercut by the cloners on hardware - exactly what happened the last time around. Apple made money from the Mac OS license, but it also lost about 15% of its hardware sales to Power Computing, Umax, Motorola, and others. In the end, Apple even tried to compete by building its own inexpensive Mac, and the Power Mac 4400 is widely regarded as the most cheaply built Mac ever.

Apple had to end the cloning program for its own survival. It had hoped that clones would expand the market, but the bulk of clone sales came at Apple's expense. Apple knows that exactly the same thing would happen were it to allow wholesale cloning today.

Those who want Apple to license Mac OS X don't see the realities of the market: Microsoft, which has never been a PC maker, makes good money from every Windows computer sold while dozens of PC makers compete to make the most inexpensive, low-margin computers possible, as this is the only competitive advantage they see in a commodity market.

Sony is an exception to the rule; it understands that some people will pay a higher price for a better product, and it manages to sell at a premium and has been profitable for ages while the dog-eat-dog world of cheap PCs devours itself.

Apple is an exception to the rule; it doesn't sell commodity PCs. Apple understands that some people will pay a higher price for a better product, and it manages to sell a unique line of products while earning a good profit.

While Apple was in dire straits a decade ago, it has been very profitable for years now.

How Apple Could Allow Clones

If Apple were to license OS X, the only way it could do so without eviscerating its hardware sales would be to partner with companies that understand that Macs are not commodity computers. Apple would probably have to license its OS on a model-by-model basis, perhaps allowing it on a Sony Vaio P or a specific Tablet PC or netbook.

Anything less that that level of control would turn the Mac market into the kind of free-for-all that we've known for 25 years on the PC side. IBM, once a success, sold its PC division to Lenovo. Compaq, the first and best IBM clone, sold itself to HP. Northgate is but a memory, and Gateway nearly went the same route. Brands barely matter in a commodity market, and when you compete on price, you make it that much harder to survive on increasingly thin profits.

That's exactly what will happen if Psystar wins its case. Psystar will see quick profits, then face a host of competitors, and in the end both Psystar and Apple's Macintosh hardware could become victims of a commodity market.

Macs are special; they are not PCs (even if they can run Windows). Turning them into a commodity would seriously damage Apple. Let's hope Apple prevails in court, retaining the right to control the destiny of its products.