Submitted by Well, it really seems as if Psystar is committed to continue its business, no matter what. The company entered chapter 11 bankruptcy protection in May, and many wondered if this meant the end of the clone maker and the legal case between Apple and Psystar. Well, today the clone maker announced that it is emerging from chapter 11, and while they’re at it, they also introduce a new “Mac”.
The fact that the company is emerging from chapter 11 bankruptcy protection is probably the biggest surprise. Many thought that this would mean the end of the small company; not an odd thing considering the costs of litigation and company operation. “As you all may already be aware in late May, Psystar filed for Chapter 11 protection. Although this was critical to our continued daily operations, we now are ready to emerge and again battle Goliath,” the company states, “More information will be available in the coming days when we will be formally discharged by the Bankruptcy court.”
“When life gives you apples, make applesauce,” they add cheekily.
The company also introduces two new products, one of which is a new Mac clone. The Open(7) sports a quad core Nehalem processor, a maximum of 12GB of RAM, and lots of other configuration options, coming in at 1499.99 USD for the base configuration. Mac OS X Leopard comes pre-installed at no additional cost.
I guess we also got an answer to the question to what Psystar was referring when it said it had Intellectual Property of its own: the Darwin Universal Boot Loader. This is a graphical bootloader that looks similar to Chameleon 2.0, of course with full Mac OS X and XNU support. Existing Psystar customers will get this new fancy bootloader as well, and they promise it will be released as open source shortly.
Just go away…ugh.
Why?
I think this case is important – it’s not like they are cutting Apple out of the loop as the OS is actually bought.
I think this is a good way to see how legally binding EULA’s really are. I would hope that they are not binding at all – Just imagine Ford telling you that after you bought its cars you could only drive it on Sundays on lanes that it has certified safe for the car.
Ofcourse, Apple should not have to provide (hardware) support if its terms are breached, but that is a different thing.
EULA’s are legally binding. It’s already been ruled on many times throughout the U.S. See Blizzard v Bnetd and MDY v Blizzard for two examples. And a really great example that has many facts on point in this case is Altera v Clear Logic. There are circumstances in which a specific EULA or a clause in an EULA may be voided, but overall, the chances of Psystar winning this particular case are infinitesimal.
The thing is that Pystar are really paying OEM / Upgrade pricing because Apple’s model has allowed them to keep the retail price at something that resembles Microsoft’s OEM / Upgrade price. Pystar are not an Apple OEM, they have signed no agreements that bind them to anything as per Microsoft’s OEM agreements, yet they are purchasing the product at OEM equivalent pricing levels.
I’ve said this before but if Apple were to lose this case its really a simple proposition for them anyway. They whack the retail price up to match Microsoft’s retail pricing for “Windows Ultimate Makes Your Coffee And Massages Your Feet Edition” and provide “loyalty discounts” that bring that price back down to the current retail price for registered owners of Apple manufactured Macs. That way Pystar have to pay more for the OS so Apple still make their profit whether they are selling the hardware or not.
As for how Pystar came out of Chapter 11… :S
Can someone please, for once and for all, give me ANY proof to substantiate the claim that Mac OS X is sold at a loss?
Please…?
This statement is as old as the sun, yet I’ve never seen ANYONE back it up. It must be one of the most oft-repeated proofless claims out there.
Edited 2009-07-03 00:00 UTC
If I had access to the Engineering staff annual salaries, combining that with the R&D overall cost related to OS X, plus the mass production cost all subtracted from the Total Sales I could get close.
Unfortunately, I doubt Apple is going to do that.
He never mentioned Apple losing money: just that, with the OS being partially costed with the hardware purchase, that the natural price of the OS without the hardware associated with it (Apple-made hardware, for the TUE) would naturally cost more: Psystar is living off the back of Apple with their shenanigans, and that’s the crux of the matter, and if, for some weird reason, despite all the European legal “rights” claimed that you believe make sense (but, this is the US, and we don’t do things in exactly the same way here, so what goes in Europe, unless the laws are identical, means absolutely nothing) somehow get into this case in the US and forces Apple to ignore what Psystar is doing, then Apple would want to do what the OP is stating: raise the price for those that purchase it for non-Apple-made machines, and reward legitimate Mac owners with a price discount for upgrade copies. Since Apple is in no way close to having a monopoly in PC hardware anywhere in the world that I’m aware of, there’s no chance that they wouldn’t be able to do this, if, for some reason, the court ruled that Psystar had a legal leg to stand on in the US.
Microsoft has always wanted to sell their OS for every Tom, Dick and Harry machine, as they’ve never been a PC manufacturer selling their own PC hardware: that’s just their business model, and it seems for the most part, that has worked out rather well for them, regardless of whatever things they’ve done in the past. It’s very unlikely that any court is going to force Microsoft to abandon their business model and tell them they can only sell their OS to run on a machine that they manufacture, not even getting into other things that could pop up.
By the same token, Apple’s model is to do an all-included model of hardware + software, and that’s how they’re competing against everyone else: it is also similarly unlikely that (at least in the US, not sure about the idiot EU authorities) the court is going to order them to change their business model. What Psystar is attempting to do is force Apple to change their business model, with no agreement of Apple of wanting to do that, by reselling OS X as though they were acting as general third parties for Microsoft’s OS for generic hardware.
Of course, I realize this is all rehashing the issue, but it is apparent that it has failed to sink in as to how things really are. All the evidence from the past indicates to me that Psystar is going to end up on the losing end of this battle, and deservedly so. Why on earth should any company want to have their brand tarnished by having part of their product associated with officially unsupported, officially unrecognized machines, where Apple may find themselves the brunt of complaints for resolving functionality issues between the part that they create (OS X) not working with the part they have no control of (the PC that Psystar provides) and that’s not remotely right. There’s more to this whole thing than just whether or not Apple makes money or as much money on the sale of the OS that they develop, when used by a third party without their permission: there’s also the dilution of brand and related things, and it seems you’re conveniently ignoring this, pointedly.
You are engaging in a totally selective rewriting of history.
MS-DOS would only work 100% correctly on IBM branded PCs until Digital reverse engineered the BIOS.
MS would make almost certainly make PCs if antitrust legislation allowed them too.
Well this statement in itself is somewhat of a rewrite, when you factor in that at the time of MS-DOS, we neither had the computing industry we have today, nor would it have created any ripples what so ever had Microsoft chosen the same path as Apple. Anti-trust issues evolved much later in their life.
Apple does sell OSX, with the intention of the OS to be installed on Apple products. I have to admit ignorance on this subject as I am not an Apple user, but as far as I know Apple does not seem to require any ties to the hardware when installing OSX. Would it be reasonable to ask then why Apple does not require a hardware product serial number to be entered when installing the OS?
It’s obvious that Apple sells the stand-alone copies of OSX with the intent that they are to be installed on Apple computers. But intent is not legally binding.
There are some minor protections that have to be overcome to install OSX on non-Apple computers. But there are several common workarounds, at least three commercial efforts including Pystar.
But as long as the workarounds aren’t used for making illegal copies or other copyright violations, then there’s nothing wrong with it.
It was Compaq, not Digital. Also, there is nothing stopping MS from making PCs, There is lots of competition in the PC market. They were allowed to make video game consoles, which isn’t much different.
The only thing stopping MS from putting out PCs is MS (Thank god)
…and again, you provide no proof whatsoever that Mac OS X’s price is subsidised by the hardware. You THINK it is that way, but you provide no proof. It could very well be true, but just saying “naturally” doesn’t make it so.
So, again I ask: where is the proof that Mac OS X is sold at a lower price than would be the case if Apple had no hardware business?
(Note: I agree that “at a loss” was a faulty statement in my previous comment)
Can you actually prove that Apple is selling OS X at profit? Until one have the financial details from Apple itself, I believe both claims can be true or both claims can be false. You’re just being hypocrite here. You know that he can’t prove it and you also know that you can’t prove it otherwise.
Uhm, I’m not the one making any claims here. Like I said in the post, it could very well be true that OS X is sold at a loss or at a lower price due to hardware. Could very well be.
I’m not saying either one is true.
However, Apple people always claim as a fact that OS X is sold at a lower price due to Apple’s hardware business, yet no one has ever provided any proof for this statement. I just want to see the proof backing that one up.
Not true. At least not what the original poster said. He said that the scheme allows Apple to do this. There’s actually no word of Apple “doing it”. Is simple speculation from both camps.
Apple software sales earned $625,000,000 for the last reported three month period. That’s twice as much money as the entire company’s research budget for the same period.
Maybe it’s possible that hardware development is subsidized by software sales?
That would be interesting to see. OEM pricing for Windows, to real OEM’s, is only like USD $25 or so. You have to remember that OEM’s like Dell, HP, Toshiba, IBM, etc. are where most people get their computers from, and they get the best deal. SO as an OEM, Psystar is paying much more for OS X than they would for Microsoft products. Do not confuse the hobbiest OEM pricing, such as is found at retail sites, with what OEM’s actually get.
Correct. Current OEM prices for Windows XP is something like $15 (or so I’ve heard) for large-scale OEM builders. Retail so-called “OEM” prices are around $90.
Full version clean install OSX prices are currently $109.
I’d also point out that OSX outsells Vista or XP at Amazon, perhaps the largest online retailer on the entire planet.
My point, Apple is making a fortune selling stand-alone OSX copies to system builders and hobbiests, like myself and Pystar.
Bob you’re correct on this. Large OEM’s who have agreements with Microsoft are sold branded OEM COA (Certificate of Authenticity) license stickers in batch lots, and they are allowed to burn Their own Custom OS Restore disks that have their branding and any custom preinstalled drivers, and software that they want to include.
The smaller OEM companies have to pay a higher price and they normally buy their OEM sets in 5 or 10 packs from authorized microsoft resellers at a price that is slightly cheaper per unit than the individual OEM packs that are sold at places like Frys, Newegg, ETC.
Psystar is buying Retail OSX Leopard install disks and paying the full retail price for each retail box that they purchase.
I know I was able to get my retail boxed copy of OSX Leopard used off ebay for around $60 including shipping.
This helped me to keep the costs down when I built D945GCLF Intel Atom based Hackintosh system.
I blogged about the details for it and have some pictures of the system if anyone is interested.
http://doctorevil30564.blogspot.com/2009/06/intel-d945gclf-atom-hac…
OEMs sign agreements with software manufacturers in order to qualify for volume pricing. Pystar does not receive nor has asked for any such pricing agreement with Apple.
Secondly, you don’t need a signed or negotiated agreement with Microsoft in order buy copies of Windows for installed resale. I would actually guess that most small-scale builders, on the scale of Pystar, have no such agreement.
Edited 2009-07-03 04:45 UTC
Paint me surprised. Where is the cash coming from, are they counterfeiting that too?
The assumption was that they went into bankruptcy for the sole reason to hide where their funding is coming from.
I guess they got the extra shell companies in place to better hide where that funding is coming from.
An approach that may be considered radical in the world web 2.0 may be to make money by selling product.
It’s not like they have not been selling computer systems/clones… maybe they were enough to cover costs?
Or if there is a white knight, it may be shown in the next few days, but even here, why would a company be willing to lose money when selling computers?
Microsoft have shown time and time again they aren’t this smart, but what do you think is the best way to hamstring Apple’s market position? They make a good few metric f–ktonnes on their hardware sale, so I think it would be smart for Microsoft to try and break the tie between OS X and an Apple computer. You eliminate some of their hardware sale when the curious buy a copy of OS X, but the reluctance to switch isn’t out of money concerns – they can keep on FUDding the market up while Apple’s profits drop from people opting to buy the OS but not the hardware.
I wouldn’t condone such action on Microsoft’s part, but the idea is certainly an attractive one.
Microsoft would have more to fear with an OSX that is not tied to apple hardware – they would have another competitor for the OS on the typical DELL PC.
No matter how far apple gets, with it producing its own hardware, there are natural limits to its marketshare and Microsoft would know that too.
MS would be crazy to fund psystar, they don’t need the competition. Right now, OS X is mostly contained to a small part of the market.
If OS X was let loose, MS would suddenly have a competitor seen as much more secure and usable, unix based and you can even run Office. MS’s market share would plummet.
In this case MS fud wouldn’t stop it, nothing would. People like OS X, in a lot of cases, it’s the cost of the computer holding people back.
Your comment implies that they were counterfeiting something beforehand. PsyStar just build and sell computers. There’s nothing shady about that.
Minus the part where they break the law to install Software they have no license to do, you are correct.
Wrong. It’s not against the law to install software that was legally purchased. Anyone can do it, and anyone can later resell the computer with the software installed.
Funny thing, Pystar buys OSX directly from Apple and from authorized Apple dealers. Apple gets mad when Pystar legally installs OSX on computers for resale, but not quite mad enough to stop selling OSX copies to Pystar.
You’re being intentionally thick. Legally purchased? Yes. For what end intent? Is it to be applied to previously owned Mac Hardware or their own clone hardware that violates the purchase of that Software?
We know the answer.
Edited 2009-07-03 10:05 UTC
This is mistaken on both counts.
First, it is not OK in terms of US copyright law S117 to make copies or modifications as a necessary step in using software, and then to sell on the mods or copies without the consent of the copyright holder.
Installing is making a copy. One that is lawful, but it is making a copy. So it is not OK for Psystar to do an install and sell the result, even if they sell the retail copy with it. It almost certainly must be structured like this: they transfer ownership of the machine and the retail copy, and then they do the installation for a fee and ship the result.
The intent for which the retail copy is purchased is irrelevant. There is no law saying that only the pure of heart may buy OSX at retail, and that they may only use it in pursuit of Godly ends.
They have f–king balls!
I give it a month before it all caves in.
True… still…
Yesterday I saw the latest Terminator movie.
I dunno why this came to mind, sorry for the off-topic
This Open(7) box really makes the single-processor Mac Pro look like an unreasonable purchase (I’m not comparing it with the dual-processor, because it’s in a completely different market, with no direct competitor and an exorbitant price).
Of course, Mac apologists will downvote this, saying that you don’t get the exquisitely engineered case, because that is worth the 1000+ USD premium over the Open(7), right?
You can’t even get a Blu-ray drive with the Mac. Any Mac, for that matter. Even Acer gives that.
You can’t get Bluetooth out-of-the-box with the Mac Pro and that is just silly.
You cannot configure the single-processor Mac Pro with more than 6GB of RAM, whilst the Open(7) can have 12GB and for a reasonable price.
And the frankly retarded video adapters, 29 dollars each, get them while they’re hot!
Look, I love the design of Macs and there *are* some things you can have in the single-processor Mac Pro, but not in this PC (multiple graphics cards, for one), but with OSX available on such PCs as the Open(7), the premium price is completely unjustifiable, even to the most twisted Mac-loving mind. And that’s what Apple is afraid of.
“You can’t get Bluetooth out-of-the-box with the Mac Pro and that is just silly. ”
Oh boy. *roll eyes*
ALL Mac Pros have bluetooth.
Yeah, and the single-processor Mac Pro is now limited I think to 8GB (before it wasn’t crippled that way) not 6GB. Nobody gets the single processor Mac Pro though, historically they sell more of the dual-processor model; which in comparison to other workstations of it’s kind, is not too high priced.
(Dell sells a dual-Xeon workstation for more, for example, and considering that it’s running Unix(tm), it may be fair to compare it to Unix workstations costing more with similar performance or hardware. With the added plus that not only can it run Unix software, it can run Photoshop and Office (not that you need a Mac Pro to run Office!))
You really have to admire these guys’ cheek. They are really going for it, with a sense of humor too. Its a wonderful soap opera, though of course with very serious undertones.
This thing is not looking sustainable for Apple. Its getting to be time for plan B. Which could be one of the following:
1) Give up and just let Hackintosh makers go to it. Lose at least some hardware sales or margins, as people refuse to buy Macs just to get OSX, when they can get it a cheaper and better way.
2) Raise the retail price to Euro 500 or so. Kill retail sales of OSX and lose the associated margin.
3) Go to product activation or some form of locking to make only those machines sourced from Apple are possible for installations. A lot of work, and now the community has the bit between its teeth, its going to be a continual war. Doubtful if its worth it.
4) Set up an OEM program. This would let them get more software sales and have some control over the hardware that it is preinstalled on.
The Mac fraternity is obsessed with the clone program of the last century. If they choose (4) they are going to have to do it smarter than Apple did it then. The main problem then was that it was not a real properly run OEM program, and it was not accompanied by steps to make their hardware business competitive.
Were it me, I’d be thinking that the right exit strategy would be to drop all the nonsense about mandatory hardware/software integration, and split the business into hardware and software divisions, and turn them loose. The hardware division would become a Windows and OSX OEM, and it would sell both OSs based on design, glitz, thinness, at a premium price. They will sell very well. The software division would compete with MS and probably increase share significantly, more than making up for any losses in hardware.
Basically, at the moment they are limiting hardware sales in the name of favoring the software sales, and limiting the software sales in the name of favoring the harware sales. Both suffer as a result. What they need to do is cut each loose to maximize its potential.
Yes, I know you Apple fans would not buy Macs with Windows on, nor would you buy OEM machines with OSX on. That is not the point. You would not have to. You are not the only valuable potential customers for Apple, and will just have to get used to the fact.
Edited 2009-07-03 10:44 UTC
What about this version:
2) Raise the retail price to Euro 500 or so. Add an upgrade SKU that sells for less, like Euro 89. Take a hit on retail sales of OSX, but then you can say that even the cheapest Mac includes Euro 500 free software.
It’s already unquestionably illegal for clone makers to install upgrade copies on computers without valid full licenses, yet all Apple computer users will by definition already have full licenses to use the discounted “upgrade” pricing.
Plus the vocal Apple faithful would just eat it up.