10 Things Psystar Legal Battle Teaches Us About Apple

By Don Reisinger  |  Posted 2009-12-03

10 Things Psystar Legal Battle Teaches Us About Apple

The legal battle over whether Psystar can sell Mac OS X-based computers is quickly coming to a close. In a not-so-surprising development on Wednesday, Psystar stopped offering its computers on its Website. The decision to take the computers down was the result of a crippling loss in a recent court battle with Apple. Psystar also agreed to pay Apple a whopping $2.7 million for damages and legal fees related to the sale of those computers.

Psystar started out as a small firm that had an idea to sell Mac OS X computers under Apple's nose. It didn't take long for Apple to find out and engage in what has been a long and trying court battle between the two companies. Most observers never thought it would have lasted this long. They believed that with a stable of high-powered lawyers at its command, Apple would quickly run roughshod over Psystar in the court proceedings. It didn't happen-the battle lasted more than a year.

But over the course of Apple's battle with Psystar, the small vendor taught us quite a bit about Steve Jobs and Company. Let's take a look at exactly what can be learned from the case of Apple vs. Psystar.

1. Apple will protect its property until the bitter end

If nothing else, we've seen a reaffirmation of Apple's long-held stance that the computer company will tenaciously protect its intellectual property from infringement by anyone. Often times, small companies mimic larger firms' products and in many cases, it's not worth it for the big firm to attack the small company, unless it directly steals intellectual property, trademarks or any other intangible property. But in Psystar's case, it was a different story. Apple realized that Psystar's operation was a direct threat to its bottom line and it did what it had to do to stop it.

2. Apple doesn't want to license Mac OS X

It's abundantly clear now that Apple has no desire to license Mac OS X. If it did, the company would have stopped fighting with Psystar and instead worked out deals with major PC vendors, like Dell and HP to license its software. In one fell swoop, Apple could have killed off Psystar (after all, its only advantage was Mac OS X), while substantially increasing its software revenue. Instead, Apple decided to sue Psystar. That move underscores its desire to keep Mac OS X close to the vest.

3. The company is scared of small vendors

Apple's decision to sue Psystar also highlights its fear of small vendors. If Apple failed to do anything with Psystar or it simply licensed Mac OS X, there would have undoubtedly been a slew of new companies arriving on the tech scene to sell Mac OS X-based computers. That would have saturated the market, likely limiting Mac sales. That was something that Apple wanted no part of. Small vendors are great for some things, but as far as Apple is concerned, it doesn't want to have to deal with them on the software front.

4. Mac OS X is a key to Apple's success

By suing Psystar, Apple has proven that Mac OS X is a major reason why its computers have been such a success. If Mac OS X was just a piece of software that no one cared about, Apple would have likely licensed the operating system a long time ago. But consumers buy Macs for more than just their good looks. They buy Macs because the experience Mac OS X provides is, in their estimation, superior to Windows' experience. Apple knows that. And it know that if Psystar was allowed to run amok, trouble would have ensued.

Apple Makes an Example of Psystar

5. Apple views itself as a hardware company

At the same time, Apple realizes it's a hardware company. It doesn't want to get in the business of selling software and being forced to maintain it as more malicious hackers take aim at it. Steve Jobs knows that his company is so successful today because of hardware sales. To simply forgo that revenue for the sake of software just doesn't make any sense.

6. Apple won't allow another Psystar

As I mentioned, Apple had several options for how it wanted to handle Psystar. But by suing the company, seeking damages, and ensuring that the interloper is effectively crippled, Apple has proven that it doesn't plan to allow another Psystar to crop up. In the small chance that one such company does start offering Mac OS X-based machines, you can bet Apple will follow the same strategy. An alive and well Psystar was simply not an option for Apple.

7. Apple is a premium brand

Apple also believes that it can make far more money by selling Mac OS X-based computers exclusively than getting a piece of sales derived from other Mac OS X-based machines. Apple can control its brand, which to this point, is widely considered a "premium" offering. By allowing the market to become diluted with other Mac OS X machines, it's likely that Apple will lose that luxury. The last thing Apple wants is another company damaging its brand's identity.

8. Choice is not
an option for Apple

Following that, Apple has no interest in giving consumers the option to choose among multiple Mac OS X-based computer vendors. Quite the contrary, Apple has shown that it is quite content to remain the sole producer of Mac computers. From a business perspective, it makes a lot of sense. Why take on competition when you don't need to? But from a consumer's perspective, that's a little troubling. Having the option to pick what kind of computer would run my Mac OS X installation would be ideal. And it would likely cause Apple to improve its hardware more rapidly than it has in the past. But that wasn't Apple's goal. Its decision to take out Psystar was for purely business reasons.

9. Apple
made an example of Psystar

Apple isn't content to simply stop Psystar from selling Mac OS X-based machines. Instead, the company wants to make it as a damaging to the small vendor as possible. Consider the fact that Apple is now seeking millions of dollars in damages- an amount that could be extremely difficult for such a small company to come up with. Apple also set out to demonstrate that any other company even considering selling Mac OS X computers will face a firestorm legal action to ensure that it is unlikely to happen again any time soon.

10. Apple knew Psystar never had a chance

In the end, it's likely that Apple knew from the beginning that Psystar never had a chance to win its battle. The company's End User License Agreement is iron-clad; Psystar's practices were suspect; and the small vendor didn't have the money nor the quality of lawyers to outlast Apple. Psystar simply couldn't hold the high ground in its battle with Apple. And Steve Jobs and his legal team capitalized on Psystar's untenable legal position.

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