Posted on 11/12/2009 1:41:18 PM PST by Swordmaker
Two rebels defy a beloved computer company
Robert Pedraza is a 24-year-old self-taught programmer with a thin frame, spiky dark hair, gleaming braces and squinty eyes. His brother Rudy is a year older and three inches taller. He wears a half-buttoned dress shirt and has an intense stare.
Last year, the two Miami natives shoved a stick in the eye of Americas coolest corporation. Robert cracked the code behind Apple Computers elegant operating system, OS X. Its the engine that drives iPhones, MacBooks, and all the other shiny white or black toys the world loves. For more than a decade, the Silicon Valleybased firm has coded its operating system to work only on Apples expensive hardware.
The Pedrazas company, Psystar, buys the software legally and installs it in boxy black desktop towers that sell for as little as $599. Thats about half the price of comparable Macs.
For hundreds of buyers and lately a score of copycats in Los Angeles and around the world the brothers bold move has meant freedom: Macs acclaimed software has been liberated from its pricey hardware.
Apple hasnt taken the affront lightly. In July 2008, three months after Psystar began shipping computers from a tiny Florida warehouse, the giant firm, with its 35,000 employees and billions of dollars in revenue, filed a 35-page lawsuit in U.S. District Court in San Francisco, claiming Psystar was selling unauthorized versions of OS X.
So far, the court hasnt ruled. Indeed, in August the brothers countersued, charging that the OS maker was illegally trying to inhibit trade. As with Microsoft, which lost a multimillion-dollar antitrust decision in Europe in 2004, Apple is protecting an illegal monopoly, Psystar claims.
Fred von Lohmann, staff attorney for the Electronic Frontier Foundation, a group that advocates for Internet free-speech issues, thinks the brothers just may prevail. Weve lived 100-plus years with the basic proposition that if you bought it, you own it, von Lohmann says. We dont let vendors reach into your living room and micromanage how you use a product. Why should Apple get away with it?
During the past 18 months, the brothers have forked out hundreds of thousands of dollars in legal fees, flirted with bankruptcy, and suffered mega-abuse from hostile Mac bloggers, who have called them hucksters, frauds and credit card thieves. As a kind of threat, street-level photos of their homes were posted on blogs.
The two have no plans to stop. They have already fought through a turbulent childhood and lost their dad to federal prison. Rudy, the business mind behind the venture, barely escaped a cancer scare and a near-fatal brush with a drunk driver.
They say they are prepared to take on everything Apples lawyers throw at them, because they believe theyre right, because they think the courts will eventually agree with them, and, maybe most of all, because they believe Apple is trying to bully them.
Last month, the Pedrazas released a new line of Apple clone computers with the latest operating system, Snow Leopard. For an encore, they began selling their software online so that anyone can make a pirated Mac.
Were all in, baby, Rudy Pedraza says, grinning wildly. Go big or get the hell out.
Rudy and Robert were born in Miami to a young Cuban immigrant named Rodolfo Pedraza and his wife, Maria Elena Benavides, a first-generation Cuban-American. As youngsters, the boys loved to tinker. They helped their dad take apart a boat engine, clean the pistons, adjust the belts and reassemble it. Theirs was a happy childhood.
But in 1991, a few months after Rudy turned 7, police officers arrested Rodolfo for selling cocaine. He was sentenced to 10 years in federal prison. His sons were devastated.
The brothers declined to discuss their fathers arrest, except to ask that it not be included in the story. It doesnt define our lives, Robert says.
Their father rejected an interview request, and their mothers last listed address, a West Kendall townhouse, was abandoned and padlocked.
Rudy says he began rebelling against his mother after losing his dad to jail. I cant live with rules that well, he says. But the boys did talk her into buying a clunky PC, even if it could barely run word-processing programs.
Rudy excelled at Coral Park High and was active in Coral Parks Future Business Leaders of America. His adviser, Nelly Odio, remembers him as extremely smart, just leaps and bounds above everyone else when it came to computers and programming.
Robert began at Coral Park a year after Rudy. He also stood out, hanging with smart kids, doing well in class, and even volunteering to design Coral Parks Web site for free, Odio says.
After school, Rudy worked long hours designing computer systems for businesses around Miami. He declines to name them, but Odio confirms he pulled in serious cash, even as a 16-year-old. He was making tons of money in high school as a computer consultant, probably more than I do today, she says, laughing.
Maria and Rodolfo divorced in 1996, two years before Rodolfo earned early release from prison. The boys moved in with him.
Rudys grades were good enough to get him into the University of Florida in 2002, though he later dropped out. Robert never graduated from high school, but he did find work as a computer consultant.
By 2005, the brothers decided to join forces to create a tech firm, and for the next 18 months, they worked small, freelance projects.
They formally incorporated their business in July 2007, under the name Psystar Corp. It was a meaningless name, Robert says, adding, In hindsight, I wish wed picked something people could actually pronounce. (Its pronounced sigh-star.)
The Pedrazas converted Rudys two-car garage into a home base, filling the space with desks, computers and a workshop.
Roberts pet project was Macs OS X operating system.
The OS X system debuted in 1999 and is widely considered among the most user-friendly ever invented. Though the software sold for $100 or less, it was programmed to run only on Mac computers and the cheapest fully equipped models usually cost about $1,000, almost three times the price of the cheapest PCs available. (Windows, by contrast, can run on nearly every kind of computer, including Macs.)
Like a lot of people, Id always loved Apples interface, Robert says, but theres no way we could afford that stuff growing up, so we always felt sort of excluded from the company.
Robert set about learning how Apples OS operated and then figured out how to trick it into running on the cheaper PC. He was hardly the first to do so. For nearly five years in the mid-90s, Apple licensed a host of companies to make authorized clones. Today theres an entire online culture called the Hackintosh community devoted to decoding Mac programs for other systems and sharing their secrets.
In fact, members of one such group the osx86project have since claimed the Pedrazas used their work to hack into Apples hardware.
Rudy scoffs at the idea that he borrowed from the Hackintosh scene. The first thing you have to do is unlearn everything youve read online about how to make this work, because its all wrong.
Robert says he found his own wayaround Apples built-in security devices. The breakthrough meant that, among other things, the cheap machines were immune to viruses and hackers.
The brothers insist they did not set out to challenge Apple. Its a common misconception, Rudy says. I kind of wish we had, because we probably could have approached this from a much more logical starting point.
Rudy does remember telling his brother at some point, Look, were going to sell this thing online.
Robert was reluctant. I guess Im just more conservative than Rudy, he says. I wasnt worried about Apple, really I just didnt think it was ready to sell.
Rudy prevailed. In April 2008, the company went online. Almost immediately, everyone from Apple bloggers at sites such as MacRumors.com to tech writers at newspapers as far-flung as The Guardian in London and the New Zealand Herald wanted to know about this mysterious South Florida company that dared to offer Macs at PC prices.
Initially, the reaction was split neatly into three camps: those who applauded the idea, those vehemently opposed to it, and those convinced that the entire thing was a fraud.
Please, God, let this work out, wrote one of the first commenters on MacRumors. This is almost insulting, wrote the next.
The backlash began in earnest a few days later. Psystar Exposed: Looks Like a Hoax, trumpeted Gizmodo, a cheeky blog owned by Gawker. Who are they, and why are they so shady? the site demanded. By the end of the week, the sites writers confidently proclaimed, These guys are obviously clowns. Gizmodo then posted photos of the exterior of Rudys house in Kendall. Ass-hat scammers, one commenter scoffed.
Having some dude walking around your house is scary, Rudy says.
It didnt help that Rudy changed Psystars official address three times in the companys first week, shifting it from his Kendall home to the current headquarters, in a Doral industrial park. Or that Psystar had to suspend sales for a few days while it switched credit card processors the brothers werent equipped to handle the hundreds of orders pouring in.
We were just not prepared for this kind of reaction, Rudy says. And the violence of the backlash was just shocking to us.
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 Psystars first models, which ran for as little as $399.
On the Web, debate raged over whether the brothers were brave rebels or black beards. Nary a sound came from Apple Inc.s palatial headquarters at 1 Infinite Loop in Cupertino, California.
That changed on July 3, 2008. Apple filed a 35-page lawsuit against Psystar in Californias Northern District court. Psystar, the lawyers complained, was selling computers loaded with modified, unauthorized versions of Mac OS. Psystars actions harm consumers by selling to them a poor product, the suit claimed.
It was exactly the kind of response the blognoscenti expected from Apple, which has a reputation for ruthless legal assaults against potential competitors a strategy that clashes with the firms carefully groomed image as a laid-back Silicon Valley haven for hipsters.
The hypocrisy is especially clear when you consider the companys history. It was founded in April 1976 by two 20-something college dropouts Steve Jobs and Steve Wozniak who had developed their computers in Wozniaks parents Los Altos garage. Before they ever sold a desktop, they made money building blue boxes illegal devices that hacked into free phone lines.
Less than a decade later, in 1984, Apple burst onto the commercial market 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 innovative 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, Texas to sell Mac clones, 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, Apple 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?
But Andrew Beckerman-Rodau, a law professor and intellectual-property expert at Suffolk University in Boston, says the company is taking Psystar seriously. Apple is so successful because they integrate all their hardware and software. Theyve always gone hard after anyone who threatens that. Psystar, in their minds, is a threat.
Case in point: You have only to head east from downtown L.A. to Alhambra, a blue-collar neighborhood just south of Pasadena. At the corner of West Main Street and Primrose Avenue, on the ground floor of a two-story brick building with a red-tile roof, you can see why the Pedraza brothers have Apples suits sweating through their Birkenstocks.
From a loftlike showroom with square pillars and exposed brick, 44-year-old Rashantha De Silva sells PCs running on Mac operating systems under the name of his new firm, Quo Computer. De Silva has been a Mac fanatic since the companys earliest days, boasting that while he was a student at Pasadena City College in the mid-1980s, he used his student loan to buy his first Mac. Before opening the store, he worked as an independent Mac consultant around L.A.
Ive converted hundreds, maybe thousands, of PC people to Mac, De Silva says, with a lilting Sri Lankan accent. Im a die-hard Apple fan.
Resembling a well-tanned Mr. Clean, with a shiny pate, close-cropped beard and muscular frame, De Silva exhibits no anxiety or guilt as he talks about his controversial course. Quo, which sounds like core as in apple core is the first company that dares to sell Mac clones out of a retail storefront. The new machines may undercut real Macs in price, but ultimately, De Silva insists, they will bring a greater benefit to Apple, even if the companys bigwigs dont realize that yet. Their market share will increase 20 to 30 percent in the next two years. I truly believe so.
He defends his custom machines by saying it is his right to modify the hardware he buys in any way he chooses and to sell the result. If you buy a set of tires, he maintains, you have the right to drive them anywhere not just on certain freeways chosen by a big corporation.
He remembers reading open-mouthed the first reports of Psystars business plan and thinking, This is the future.
Im afraid we were going to end up with another Microsoft, with people buying so many bad computers for years just because thats all they can get, De Silva says. Competition is important.
His Quo store, which opened in June, is just a hint of the tsunami that may follow if Psystar wins its court battle against Apple. Copycats such as the German firm PearC and the Moscow-based RussianMac are betting the Pedrazas pull out a legal victory.
Its not a situation that makes Rudy particularly happy. These guys are riding our coattails and were shouldering all the court costs, he huffs.
The company doesnt wield anything close to Apples resources, but the Pedrazas think they have the law on their side. Several copyright and intellectual-property experts say they might be correct.
Apples suit against Psystar argues the Pedrazas violate copyright law by altering the operating system software. To the giant firms lawyers, Psystars crime is akin to illegally remixing a song and reselling it as ones own.
But the brothers contend an operating system is more like a CD than a song. Apples 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 that it installs on its computers. So once they pay for it, the Pedrazas ask, why cant they use it however they like?
Its like buying a book, Robert says. Once I own it, I can tear pages out, underline sentences, even rewrite a whole section. If I can find a buyer, I can resell that one copy however I please.
On a broader scale, the Pedrazas legal team pitches the case against Apple as a battle for the future soul of the computer world. If the brothers win, Apple might be forced to allow its programs to run on any computer on the market.
This isnt just about some Florida start-up versus Apple, says Kiwi Camara of the Houston law firm Camara & Sibley, which represents Psystar. Its about recognizing a future where anything can be connected to anything else.
Apples attorneys, of course, see things differently. Filings clearly lay out their reasoning. Whenever people buy copies of Mac OS, they consent to a licensing agreement that pops up when the program is installed. The users promise not to alter the software or run it on anything but Apple hardware.
Psystar has clearly violated both promises, the lawyers contend.
Whats more, Apple holds that consumers who purchase an operating system dont actually own the software. Instead, they purchase the disc and then are licensed to use the system. Its a dubious-sounding arrangement but one that courts, at least so far, have upheld. Many lawyers refer to a 1996 appeals decision, ProCD Inc. vs. Zeidenberg, which found that click-through computer contracts were, in fact, binding.
Apple feels that if it doesnt go after Psystar, it leaves the door open to all these other companies that want to do the same thing, says Jim Dalrymple, a blogger at Macworld.com. They want to control the whole product, from software to hardware to advertising, because they present themselves as the one company that can give you everything you need. They dont want to lose that.
So the California case, in essence, comes down to whether Apples licensing agreement trumps the Pedrazas rights as consumers. Both Apple and Psystar have asked the judge to bypass a trial by issuing a summary judgment.
Theres a lot at stake in this case, says the Electronic Frontier Foundations von Lohmann. If Psystar loses, it could set the stage for companies to have a lot more leeway to demand that you use their hardware.
Its not an impossible argument to win, experts say. Theyve already put some really good arguments forward, says Randy Friedberg, an intellectual-property lawyer following the case in New York. Theres essentially one really interesting question here, and its whether that licensing agreement holds up.
Apple also claims Psystar is selling an inferior product, one which diminishes the companys standing in the marketplace. But several tech Web sites have reviewed Psystars computers and say the company delivers quality products.
It was nothing special visually, but from a performance standpoint compared to the price, it was great, says Rich Brown, a writer for CNET.com, who checked out a Psystar last year. We were pretty surprised. A few of our Web guys upstairs actually bought one after trying the review model.
Derek Rohaly, a 22-year-old Penn State student, nabbed a $1,300 Psystar desktop; a comparable Apple model would have cost $3,500. The music major uses complex mixing programs. It felt risky, but I ended up with a really great product at a really low price, Rohaly says.
Apple scored a brief victory this past May, when Psystar filed for Chapter 11 bankruptcy. The company, Rudy says, needed some breathing room as it worked to develop new models and fight off the legal onslaught. But Psystar emerged from bankruptcy in August.
The companys filing did make a few things clear. One is that the company was selling a significant number of computers. Among the debtors listed was DHL, with a pending $12,793 bill for shipping computers. The company also owed about $25,000 to credit card processing companies that had been handling the orders.
But the filing also shows the deep personal risk Rudy is running by taking on Apple. The bankruptcy listed a $120,000 personal loan taken out by the 25-year-old programmer and Rudy admits that is just a fraction of the debt he has incurred while fighting Apple in court. Psystar, at the time of filing, owed its first law firm Carr & Ferrell $88,464 in back fees.
Theres no question Im investing a lot of money, he says.
The cost of fighting Apple has led to a host of conspiracy theories discussed on the Web: namely that Mac rivals such as IBM and Microsoft secretly fund Psystar.
Not true, Rudy says. Im the secret funder. Its just me.
But Psystar has no plans to fold. Rudy and fewer than a dozen employees still churn out new computers at the firms tiny headquarters, tucked next to a T-shirt-filled warehouse and the Koen Pack Company in a bland Doral industrial complex. When Apple released its Snow Leopard operating system recently, Psystar responded the very next day with Snow Leopardenabled clones.
The defiant move came a little more than a month after Psystar filed its own lawsuit against Apple, an antitrust claim in U.S. District Court in Miami, arguing that Apple, in essence, runs an illegal monopoly.
The suit claims that because Apple sells a unique, premium computer, it shouldnt be allowed to corner the market on its operating system by requiring purchases of the companys hardware.
By tying its operating system to Apple-branded hardware, Apple restrains trade in personal computers that run Mac OS X, collects monopoly rents on its Macintoshes, and monopolizes the market for premium computers, Psystar argues.
Its a position that echoes the massive decision against Microsoft in Europe in 2004, when a court found that the software giant broke competition rules by tying the Windows operating system to its media player. Microsoft was forced to allow rival programs, as well as pay $794 million in damages.
There are some genuine issues in that argument, says Ury Fischer, an intellectual-property lawyer with Coral Gables Lott & Friedland. Apple clearly doesnt have a monopoly in the computer world, but they do have a defined niche. The question is whether they abuse that position.
Apple hasnt yet responded to the Florida suit. But the Pedraza brothers won their first real legal victory in September, when the judge presiding over Apples suit in California refused Apples motion to combine the two cases.
If Apple and the blogosphere expected Psystar to fold after the company struck back, theyve been disappointed.
Instead, just last month, Psystar slapped the computer giant again. The Pedrazas began selling software that allows users to install Mac OS on their own PCs.
Now, anyone with basic computer knowledge can make a cloned Mac for the cost of an SUVs full tank of gas. Its important to question authority and buck the system, Rudy says by way of explanation.
He and his brother have aptly named the software Rebel.
If you want on or off the Mac Ping List, Freepmail me.
Sometimes the acorn doesn't all far from the tree...
KEWL! ! !
More power to ‘em.
If Microsoft can’t be a monopolistic dog in the manger, why should Apple be allowed to so do?
I don't see them doing anyting illegal. They are simply allowing the software to run on other hardware. The "rebel" product seems to be a stand alone program that lets OS 10 run on any PC.
Since they are not modifying the Apple code, or even copying it, then what they are doing is fine.
But in the end the judges will decide. (I bet and hope they win though)
Apple has right around 10% market share. That isn’t much of a monopoly.
You’re right, it’s not illegal (so far, I suppose.)
But perhaps they should use their talents to build a legal OS for the Mac. OS X is based on open source, if I recall correctly.
btt
I guess Windows 7 will destroy thay argument.
:-)
I fall on the side of Apple here. Apple’s development costs would sky rocket, and the reputation of the operating system would suffer, if they had to supply drivers that worked on all the bits of hardware in existence in the PC world (and we aren’t even talking about the special hardware like webcams, but just “simple” stuff like SATA controllers and accelerators). Ie., they’d be like MS.
Ie., if the court makes Apple sell their OS to work on any HW, then court must provide some mechanism for Apple to protect its reputation from the damage that will be incurred by forcing Apple to support machines they don’t have the resources to support. Honestly, I don’t see how it is possible.
It’s like telling Chrysler that their engine control software for a turbo 2.5L engine must be 100% compatible, 100% emissions compliant, and 100% reliable if a user happens to want to install said software on a GM Chevrolet Corvette engine management computer. It’s ridiculous.
But I also wanted to note that I don’t think Psystar making a legal OS for Mac is really worth it. They are currently selling machines because they are selling a cheaper Macintosh. A outside-of-Apple sourced operating system for high dollar Apple hardware is not even in the realm of reasonable. Apple will always support their own hardware the best, and they will always have the most innovative interface (unless you fall into the MS fanboy camp :)).
Personally, I don’t have any problem with Pystar. As long as they are selling legitimate copies of the OS, they are free and clear as far as I’m concerned.
Because Apple has not been adjudicated to be a monopoly player as Microsoft has. In addition, the courts have ruled that a company cannot be an illegal monopoly in its own products. Psystar has been shot down on BOTH arguments. There are numerous examples of case law supporting the licensing model for software... and that will also stand.
They are installing OS X in contravention of the license. They don't own the software and cannot decide how it is to be used, only the owner can do that. All they own is a license to use it in accordance with the terms of that license.
Since they are not modifying the Apple code, or even copying it, then what they are doing is fine.
They ARE modifying the Apple code and have admitted to doing so in the California case... and have even told Judge Alsup they'd be willing to accept a "nominal fine" for doing so. They have also agreed to accept an injunction against selling OS X Leopard... because, they say, they are now modifying and selling OS X Snow Leopard instead.
Personally, I dont have any problem with Pystar. As long as they are selling legitimate copies of the OS, they are free and clear as far as Im concerned.
Microsoft's business model is to sell licensed copies of software for use on "IBM compatible" PCs. Apple's business model is to sell computer systems - software license and hardware, as a package deal. The Apple model allows the company to profit from its development of software without having to charge big bucks for upgrades. In the present instance, only $29 for Snow Leopard as an upgrade from Leopard (tho Apple makes no provision for preventing SL from loading on an old Mac without Leopard on it).You want Psystar to succeed in destroying Apple's business model, forcing Apple (so you think) into the Microsoft model of software license sales, with Apple's Mac line of hardware becoming uncompetitive and falling by the wayside. Well, yes, it would do that - but there is no necessary reason why Apple must remain in the personal computer operating system business at all. Apple is making big bucks on smart phones and iPods - and would quickly start losing money on developing OS X under the Microsoft model rather than its own model. The probable result of what you are wishing for is not more competition for Microsoft, but the end of aggressive development of OS X.
Wow - playing the same "evil greedy corporation" game that the 0bama administration and the Democrat party as a whole have been playing to punish those who actually hire, pay wages, and pay the bulk of taxes already... No bias here, just move on...
So - I have a question. How would MS react if... say... a creative type busted the code to run all the X-box stuff, then built econo-box machines that could play all those X-Box games, but without MS getting their cut? In the process, this crafty soul had to reverse engineer, then re-engineer this set-top box to fool the x-box code into believing it was a real X-box.
"By tying its operating system to Apple-branded hardware, Apple restrains trade in personal computers that run Mac OS X, collects monopoly rents on its Macintoshes, and monopolizes the market for 'premium computers,'" Psystar argues....as opposed to the non-profit public service work he and his brother have been doing. :')
Flawed logic throughout the piece and the author presents it without blushing.
Oh well, there’s always room for a judge to wiggle out a ruling in favor of Psystar, no matter how nonsensical such a ruling may be to most of us. But if there is a ruling in favor of Psystar it’ll be a big surprise to everyone, and probably to the judge as well since he hasn’t appeared too sympathetic so far.
~~~~~~~~~~~~~~
Re-peat af-ter - me... "Mi-cro-soft -is- -not- mon-op-o-lis-tic."
I’d really have no problem with it. However, given that MS doesn’t sell the XBox OS sans the hardware, it’s a slightly different situation. One would think MS would be happy with a setup like this, as they are selling the XBoxes at a loss, and it’s the games they make the money on. However, there is no logic or reason in the law today, so I’m sure they are able to sick FedGov on anyone who would do such a thing.
I simply don't see a legal or moral problem with them taking software they've bought and loading it up on whatever hardware they want. I'm absolutely opposed to the concept of these companies claiming (when it is convienient to them) that you are actually licensing rather than buying it. The entire idea flies in the face of the doctrine of first sale, which was thankfully fully adjudicated when the US was a Republic was goverened by reason and rule of law and prior to the US becoming a corporatist state where copyright has essentially become eternal.
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