Worms in the Apple

Two rebels take on America's most beloved computer company.

For nearly three months in 2008, Psystar sold hundreds of generic PCs with Intel chips, two gigabytes of memory, dual-core processors, and the Mac operating system. Driven by heated coverage in the tech press and blogs, hundreds of consumers bought Psystar's first models, which ran for as low as $399.

On the Web, meanwhile, debate raged over whether the brothers were brave rebels or blackbeards. Nary a sound came from Apple's palatial headquarters at 1 Infinite Loop in Cupertino.

That changed July 3, 2008, when Apple dropped a 35-page lawsuit against Psystar in California's Northern District. Psystar, the lawyers complained, was selling computers loaded with "modified, unauthorized versions" of Mac OS X. "Psystar's actions harm consumers by selling to them a poor product," they claimed.

It was exactly the kind of response the blognoscenti expected from Apple, which has become known for ruthless legal assaults against potential competitors — a strategy that clashes with its carefully groomed image as a laid-back Silicon Valley haven for hipsters.

The hypocrisy is especially clear when you consider the company's history. It was founded in April 1976 by twentysomething college dropouts Steve Jobs and Steve Wozniak, who had developed their computers in Wozniak's parents' Los Altos garage. Before they ever sold a desktop, they made money building "blue boxes" — illegal devices that hacked into free phone lines.

Apple burst onto the commercial market in 1984 with a legendary Super Bowl ad that depicted an Orwellian IBM world smashed to bits by a rebel Apple innovator wielding a sledgehammer. The message was clear: PCs were the status quo; Apple was the alternative.

The firm had some early success, but by the mid-'90s, it had laid off scores of employees. In 1995, Apple began allowing a few companies — most prominently Power Computing in Austin, TX — to sell Mac clones with cheaper PC hardware running the operating system.

In 1997, Jobs, who had been ousted from Apple during a 1985 power struggle, returned as CEO and immediately put a stop to the program. His plan: Make more money with expensive hardware and nonstop innovation.

It worked. The company introduced the iPod in 2001 and the iPhone in 2007 and has been vacuuming in cash ever since. Despite the global recession, the company posted its best quarter in history this past October, raking in $9.87 billion in revenue and $1.67 billion in profit.

So why is a company with that kind of bank going after a flea like Psystar?

Apple doesn't comment about ongoing litigation, and a spokeswoman who wouldn't give her name declined to comment other than to laugh and say, "Who asked you to do this story? These Psystar guys pitched you on it?"

Fact is, they didn't. And if Apple isn't concerned, it should be. The larger firm is fighting because — believe it or not — it's worried about Psystar.

"Apple is so successful because they integrate all their hardware and software," says Andrew Beckerman-Rodau, a law professor and intellectual property expert at Boston's Suffolk University. "They've always gone hard after anyone who threatens that. Psystar, in their minds, is a threat."


Head east from downtown Los Angeles along the San Bernardino Freeway toward Alhambra, a blue-collar neighborhood just south of Pasadena. At the corner of West Main and Primrose streets, on the ground floor of a two-story brick edifice with a red tile roof, is the reason the Pedraza brothers have Apple's executives sweating through their socks and Birkenstocks.

From a small showroom, 44-year-old Rashantha De Silva sells PCs with Mac operating systems at his new firm, Quo Computer. De Silva has been a Mac fanatic since the company's earliest days. He remembers eagerly reading about Psystar's business plan and thinking: "This is the future."

"Competition is important," he says. "I'm afraid [without it, Apple is] going to end up another Microsoft. People will buy bad computers just because that's all they can get."

De Silva's storefront business, which opened in June, is just a hint of the tsunami that might follow if Psystar wins its court battles against Apple. Copycats such as the German firm PearC and the Moscow-based RussianMac are betting the Pedrazas pull out a legal victory.

It's not a situation that makes Rudy particularly happy. "These guys are riding our coattails, and we're shouldering all the court costs," he huffs. The company doesn't wield anything close to Apple's resources, but the Pedrazas think they have the law on their side — and several copyright and intellectual property experts say they might be correct.

Apple's suit against Psystar argues the Pedrazas violate copyright law by altering the operating system software. To the giant firm's lawyers, Psystar's crime is akin to illegally remixing a song and reselling it as one's own.

But the Pedrazas contend an operating system is more like a CD than a song. Apple's attempt to dictate what kind of computer runs the software, they believe, would be akin to Def Jam insisting consumers play the latest Jay-Z only on Sony stereos.

Psystar pays full price — $29 — for each copy of OS X that it installs on its computers. So once they pay for it, the Pedrazas ask, why can't they use it however they like? "It's like buying a book," Robert says. "Once I own it, I can tear pages out, underline sentences, even rewrite a whole section. And if I can find a buyer, I can resell that one copy however I please."

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