Apple, Court Clobber Cloner

Mac clones, thought to be making a comeback thanks to a Florida company called Psystar, may once again be headed for the dustbin. Late Friday, a U.S. District Court judge awarded a summary judgment against the cloner at Apple's (Nasdaq: AAPL  ) behest, News.com reports.

At issue is Psystar's right to resell the Mac OS under the guidelines of "fair use." Apple has argued that the cloner has no such right. The court agreed, and it will decide what if any damages Psystar faces in a hearing scheduled for Dec. 14. Further charges of breach of contract and varying trademark violations could go to trial in January.

Investors might remember that Apple cultivated a crop of clones to better compete with Dell (Nasdaq: MSFT  ) , IBM (NYSE: IBM  ) , and other PC makers shortly before current CEO Steve Jobs returned to the company in 1997. Jobs ended the cloning program as one of his first actions as CEO.

Psystar's systems aren't (ahem) "authorized" clones like those made by Motorola (NYSE: MOT  ) and Power Computing a decade ago, and they've received mixed reviews since coming to market last year. This isn't too surprising. You get what you pay for, and the Psystar systems -- while Mac OS-compatible -- don't benefit from the level of vertical integration that Apple provides.

"Psystar turns off the Mac OS's automatic System Update feature, so you need to download and install updates manually," wrote Macworld's James Galbraith about a Psystar desktop system he reviewed in May. "One might think that the company would send you a machine that's as up-to-date as possible, but that's not the case."

Now, thanks to the court, Psystar may not get a chance to improve its offerings. That's fine by me. In this respect, Apple is like Microsoft (Nasdaq: MSFT  ) , Symantec (Nasdaq: SYMC  ) , McAfee (NYSE: MFE  ) , and every other software provider: It gets to choose how its code is sold and supported. There's a principle to protect here.

There's also the business to consider. Apple is a hardware company; Mac sales accounted for more than 37% of revenue during fiscal 2009. Can you blame Jobs for going after Psystar? The cloner's cheap hardware has allowed it to take free slices of Apple's massive profit pie, profits that belong to us as investors.

But that's my take. Now it's your turn. Should Apple take a lesson from its tussle with Psystar, and allow Mac clones again? Or is this a zombie issue that just needs to die already? Tell us what you think by voting in the poll below. You can also leave a comment to explain your rationale.

Apple is a Motley Fool Stock Advisor selection. Dell, Microsoft, and Symantec are Motley Fool Inside Value picks. Motley Fool Options has recommended a diagonal call on Microsoft. Try any of our Foolish newsletter services free for 30 days.

Fool contributor Tim Beyers had stock and options positions in Apple and a stock position in IBM at the time of publication. Check out Tim's portfolio holdings and Foolish writings, or connect with him on Twitter as @milehighfool. The Motley Fool is also on Twitter as @TheMotleyFool. The Fool's disclosure policy enjoys the feel of a warm dinner roll after an unusually snowy day.


Read/Post Comments (5) | Recommend This Article (5)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On November 17, 2009, at 3:02 PM, ProducedByJoel wrote:

    Kudos to Steve and Apple in going after and prevailing in the Psystar case. In order for Apple to maintain the integrity and quality of the Macintosh brand it must keep control over the entire vertical process…control OS and hardware it runs on!

    What I believe Apple needs to do is to somehow get the price-point of the low-end MacBook to somewhere around $600 without seriously compromising its quality…maybe by reducing its margins somewhat. I believe that what ever Apple might lose in profits would be more than made up for by increasing the market share for the Mac. Apple has proven beyond a shadow of a doubt that they make products people want to buy and it's still pretty clear that the major obstacle is cost. There is little doubt that those consumers who are buying the $600-$700 Dells, HPs and Toshibas would be all over a $600-$700 MacBook. Once consumers are "in" the Mac universe there is little doubt they stay and it 's only a matter of time till they trade up to the MacBook Pro line.

  • Report this Comment On November 17, 2009, at 3:17 PM, tgauchat wrote:

    Mac OS X is really just another *nix.

    Heck, even Windows is improving, largely due to the incorporation of learnings from the *nix world.

    Mac's key differentiation and key to success, however, is tight control over the permitted hardware range. Ditto for iPhone.

    Separate Mac OS X from the hardware and you're really just running a "very good" Linux; but not good enough to maintain Apple's stability and ease of use reputation, and related high margins.

  • Report this Comment On November 17, 2009, at 4:02 PM, dougit wrote:

    I think Apple itself created and funded Psystar.

    A reverse Trojan Horse!

    Now apple has legal precedent...

  • Report this Comment On November 18, 2009, at 12:04 AM, papamaui wrote:

    Right is right regardless how few do it and wrong is wrong regardless how many do it. That's why we have copyright laws! Apple Corp has invested a lot of time and money to produce a great, if not the finest, product available today! Psystar can twist the logic around all they want to justify their actions ... but if the positions were reversed, I'd wager they'd be suing Apple. It really bothers me when I read postings that attempt to make wrong right and right wrong!

  • Report this Comment On November 18, 2009, at 7:36 AM, steveballmer wrote:

    Apple is stingy and hates the little guy!

    PLEASE don't buy their products!

    http://fakesteveballmer.blogspot.com

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