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Apple cloning: Worth it?

In a world where Apple's moved to Intel processors, brought pricing down, and is, well, cool, what's the opportunity for an unsupported cut-rate clone, anyway?

It doesn't take much to put Apple in the news, and this afternoon's excuse is that a Miami-based company called PsyStar is selling a Mac clone.

Its Web site was down earlier--ostensibly because of the overwhelming reaction to its product. As Computerworld's Gregg Keizer reports:

Before its site went dark Monday, PsyStar was pitching an Intel-based system it said could be configured to run Leopard, Apple's Mac OS X 10.5. The machine, which was priced at $399 minus Leopard, $554 with it already installed, is powered by a 2.2GHz Intel Core 2 Duo processor and includes 2GB of memory, a 250GB hard drive, optical drive, and on-board graphics based on Intel's Graphics Media Accelerator (GMA) 950 graphics processor. The GMA 950 is part of several Intel chipsets--notably the 945 series--that are popular on PCs designed to run Microsoft's Windows.

There are a variety of issues here:

  • Are Macs really overpriced these days, compared to a truly comparable Wintel alternative? (Certainly far less than in the past.)

  • Is OpenMac a trademark violation? (Seems possible. I am not a lawyer.)

  • Are any possible savings worth getting a PC-Mac OS combo that the Apple won't support? (Not from where I sit.)

  • Does PsyStar have the right to preinstall an operating system for which it (apparently) doesn't have an original-equipment manufacturing, or OEM, license? (Seems dicey.)

But I wanted to focus on one issue in which I have some personal experience.

The Mac OS X end-user license agreement prohibits its use on hardware other than that sold by Apple. It reads, "You agree not to install, use, or run the Apple software on any non-Apple-labeled computer, or to enable others to do so."

A little legal history now. Way back in 1978, a company by the name of Digidyne brought suit against Data General, alleging that it was restraining trade by "tying" its RDOS operating system to its Nova minicomputer hardware. (Digidyne sold Nova clones.)

The case wound its way through the courts. A 1984 Ninth Circuit Court of Appeals decision held for Digidyne; the case was later denied rehearing by the U.S. Supreme Court.

It was a convoluted court case, but the bottom-line result was that Data General could not prohibit the use of its operating system on someone else's hardware. To use the legal term, you could not "tie" hardware and software. Related cases have involved prohibiting the use of specific supplies (such as punch cards) with a specific vendor's hardware.

My personal history here is that, at one point in my career, I spent many hours with huge Lotus 1-2-3 spreadsheets, working to unbundle Data General minicomputer operating systems from the hardware on which they ran--and to do so in a way that was hopefully approximately revenue-neutral, as well as not too annoying to any customers.

This was, of course, a wholly different generation of hardware and software than was in place at the time of the original lawsuit--and there were no actual Data General hardware clones any longer. But nonetheless, it had to be done.

Does that mean that Apple's end-user license agreement clearly breaks the rules? Well, few things are crystal-clear, when it comes to legal matters. In this 2006 post in InfoWorld, James Bailey's quoted comment gives a good precis of the relevant issues:

First, DG lost because RDOS was the only viable operating-system software for Nova and any clones. There was no other reasonable OS available for the clone makers. Dell can hardly claim the same, considering that they currently ship both Windows and Linux. Claiming that those two OSes are not "uniquely desirable by buyers" would be a stretch.

To quote the 9th circuit decision: "Although expressing some doubt as to the sufficiency of the evidence, the district court assumed defendant's RDOS was superior to competing operating systems and was viewed as uniquely desirable by buyers. 529 F. We do not share the court's hesitancy about the adequacy of the proof of the strong preference of many customers for RDOS. It was a most popular product."

Even DG admitted that there was no viable alternative. Again from the record, "the only full-service operating system available for the Nova."

Second, the court determined that to re-create RDOS would be prohibitively expensive and probably not practical. Again, with Linux and other free operating-system software readily available, it is hard to believe that the courts would come to the same conclusion in the case of Apple and OS X.

Bottom line?

Apple's end-user license agreement may or may not be an issue. The tying of hardware, software, or services has generally been frowned upon by the courts. On the other hand, the ultimate resolution resolves around specific facts about market power and the like. And, in any case, there would seem to be far more immediate questions about the PsyStar approach than those that would only be resolved by multiyear court cases (which would inevitably favor Apple, in any case.)

The fundamental question, perhaps, is this: in a world where Apple has moved to Intel processors, brought its pricing much more in line with comparable competition, and is, well, cool, how much opportunity is there for an unsupported cut-rate clone, anyway?