Defiant Psystar back selling Leopard computers

After a flood of traffic, Psystar is once again selling its "Open Computer" with Mac OS X Leopard preinstalled, and might be setting itself up for a protracted legal battle with Apple and the court system.

Tom Krazit Former Staff writer, CNET News
Tom Krazit writes about the ever-expanding world of Google, as the most prominent company on the Internet defends its search juggernaut while expanding into nearly anything it thinks possible. He has previously written about Apple, the traditional PC industry, and chip companies. E-mail Tom.
Tom Krazit
5 min read

Psystar is back online selling "white box" Macs with a few subtle changes, and one employee has already played the monopoly card.

As you might recall, Psystar's Web site was overwhelmed Monday after it was found to be selling cheap computers with Mac OS X Leopard preinstalled. This caused quite the commotion, as Apple does not license its operating system to other hardware makers, and specifically prohibits (PDF) end users from installing Mac OS X on anything other than an "Apple labeled" computer.

Psystar's OpenPro Computer, which is available with Mac OS X Leopard preinstalled. Psystar

Ars Technica noted that Psystar made several changes to its Web site while it was down Monday. First of all, the product is no longer the OpenMac, it's the Open Computer. Psystar's owner, Rudy Pedraza, told Ars that Psystar did that on their own to "avoid any issues." Wonder what those might be.

The company is also now offering the "OpenPro Computer" in addition to the Open Computer, which might remind you of a certain desktop computer sold by a certain California company that uses a piece of fruit as a logo. That machine costs $999, can be upgraded to quad-core processors, and is available with Leopard preinstalled.

And, in perhaps the most necessary change, they changed the nails-on-a-chalkboard "not non-safe" phrase attached to the description of whether or not you should install Mac OS X updates to your Open Computer. Grammarians, rejoice.

None of those changes will allow Psystar to escape the basic question about its business model: Apple doesn't permit the installation of its operating system on anything but its hardware. One Psystar employee told Information Week that this requirement means Apple is behaving like a monopoly. "What if Microsoft said you could only install Windows on Dell computers?" the employee told IW.

Psystar is positioning itself as the "open" computer company. The Open Computer uses techniques--hacks, really--developed by the OSx86 project to free Leopard from the confines placed on it by Apple.

"Psystar has assembled a system that is completely operational with Leopard called the Open Computer. We call it the Open Computer to reflect the opening of what has previously been a hardware monopoly," the company wrote on a Web page describing the Open Computer.

Since they brought it up, let's review the basic definition of a monopoly, shall we? And remember, there's nothing illegal about having a monopoly, it's only when you use that monopoly for nefarious purposes that you get pinched.

The business section of Answers.com says, "A monopoly is a market condition in which a single seller controls the entire output of a particular good or service. A firm is a monopoly if it is the sole seller of its product and if its product has no close substitutes. Close substitutes are those goods that could closely take the place of a particular good; for example, a Pepsi soft drink would be a close substitute for a Coke drink, but a juice drink would not."

Debate the aesthetics all you want, but I'd argue that Windows and Linux are, for the purposes of personal computing, close substitutes to Mac OS X. They can run a personal computer. They can connect you to the Internet. They can run a basic suite of productivity applications.

You may prefer Mac OS X for a variety of reasons, but Apple's requirement that you can only run Mac OS X on Apple hardware doesn't prevent you from using a personal computer. If the only other substitutes were Palm OS phones or AIX servers, maybe you would have a beef.

Answers.com goes further to say: "The fundamental cause of monopoly is barriers to entry; these are technological or economic conditions of a market that raise the cost for firms wanting to enter the market above the cost for firms already in the market or otherwise make new entry difficult."

This is not the only computer in the universe. Apple

If Mac OS X was the only operating system in the entire universe, and Apple required you to use its hardware, lawyers would have a field day. That's because the barriers to entry into the personal computing business would be impossible to overcome, since a license for Mac OS X is not for sale.

The meat of Psystar's sales pitch is that they can sell you a Mac for cheaper than Apple. So let's consider the third element of a monopoly: the ability to set prices.

Again from Answers.com: "The major difference between a monopoly and a competitive firm is the monopoly's ability to influence the price of its output. Because a competitive firm is small relative to the market, the price of its product is determined by market conditions.

There's a long-standing argument about whether or not Macs are more expensive pound-for-pound with Windows PCs. But however you slice it, Apple doesn't have the ability to force people to pay astronomical prices for the Mac; if Macs cost four times as much as similarly configured Windows PCs, no one would buy them.

Companies are free to charge somewhat more for a similar product if they can prove to people that there is a value attached to that price. If they can't demonstrate that value, people won't buy the product. No one cares that Porsche charges more for the Cayenne than Volkswagen does for the Touareg, and those are practically the same car. That's because Porsche demonstrates more value with a better interior, cushier options, and the cachet associated with driving a Porsche.

The Psystar employee, identified only as "Robert," said the company had no plans to stop selling Open Computers with Leopard preinstalled, and hinted Psystar would be willing to fight Apple. However, Pedraza, who is likely in more of a position to decide those things than Robert, declined to comment to Ars on Psystar's next steps. Apple likewise declined to comment on Psystar or any possible action it might be considering.

I think they're tilting at windmills, but I'd be very interested to see if Psystar has the wherewithal (and the cash) needed to finance a legal test of Apple's end-user license agreement for Leopard. Courts have ruled on specific provisions within EULAs, but it doesn't appear that the general concept has really been tested under U.S. law. Maybe it's time.

But until that day, companies are not required to sell products simply because somebody wants that product.