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Mon, Mar 22, 2010 - 12:06 AM EDT  —  AAPL: 222.2499 (-2.4001, -1.07%)  |  NASDAQ: 2374.41 (-16.87, -0.71%)

Apple seeks court order compelling Psystar to turn over financial information
Friday, May 01, 2009 - 05:25 PM EDT

"Apple has filed a letter brief, redacted, asking the court for an order compelling Psystar to turn over financial documents in discovery and to designate a knowledgeable person to testify as to Psystar's finances. They've been asking for a while, and they did a deposition with the CEO of Psystar, but they tell the judge it didn't work out well, since over 90 times he said he didn't know or couldn't recall even basic things," Groklaw reports.

"The unredacted portions of the letter brief show Apple telling the judge that Psystar's CEO and founder Rudy Pedraza 'would not answer basic questions about Psystar's financials... Mr. Pedraza... stated approximately 90 times during the deposition that he did not know or recall answers to basic questions about Psystar's sales, its general costs and profits, its costs and profits by product line, how it determine it prices and profit margins...,'" Groklaw reports.

"So Apple requests from the court an order compelling Psystar to produce 'financial documents sufficient to determine Psystar's revenues, costs, profits, assets and liabilities.' Apple would also like the order to include making Psystar make available 'a knowledgeable 30(b)(6) designee' for another deposition 'at Psystar's expense' on the topic. And it wants its costs covered for having to redo the deposition as a result of Psystar's 'inordinate failure to produce and testify,'" Groklaw reports.

"Psystar has some documents in particular that Apple wants regarding financial projections that Apple noticed attached to some emails that were turned over in discovery, but Psystar, Apple says, turned the emails over without the attachments. Oops. Send their lawyers to discovery dungeon. Seriously. If you are going to withhold, not that one should, you'd think they'd withhold the entire email, not turn over emails that show there were attachments that are not being turned over too," Groklaw reports.

Find links to the documents in the full article here.

"dizzle" writes for World of Apple, "Basically what this boils down to is an alleged willful and knowing failure of Psystar to produce complete financial information. I personally find this very interesting in light of the issue of the still-unidentified ten 'John Doe' defendants. Apple may be attempting to obtain that information in this parenthetical statement:"

(including investors, lenders or other sources of financial support)

"dizzle" writes, "Taking the above-letter as absolutely true and unbiased for the sake of argument; it certainly appears that Psystar has run afoul of good-faith discovery. Federal Court Judges usually have little tolerance for such tactics. If it is indeed true that Rudy Pedraza either would not, or could not, answer financial information 90 times that would be bad for Psystar. If Rudy doesn’t know, who does? Is he protecting someone?"

Full article here.

In an article just recently posted, "dizzle" reports, "As I had suspected, Judge Alsup didn’t let too much time go by before taking this matter to hand. Within the past few hours, he issued an Order Scheduling a Hearing on the Discovery Disputes to take place on May 5, 2009. He further ordered that Psystar must respond to Apple’s allegations by May 4, 2009."

Full article here.

MacDailyNews Note: In a recent online poll, we asked, "Who's really behind Psystar?" Here are the results:


[Thanks to MacDailyNews Reader "Arthur" for the heads up.]

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May 01, 09 - 05:38 pm Comment from: rattymouse

All I can say is that Psystar makes good quality hardware. They should be allowed to sell it since they are not stealing anything. They BUY OS X and install it on their high quality hardware.

May 01, 09 - 05:56 pm Comment from: dd

I disagree with you, ratty. No other COMPANY has the right to sell OS X on their own, homemade box. If that company wishes to sell an OS besides Windows, they can either install Linux or make their own.

However, I do feel that CUSTOMERS who buy OS X should be allowed to do what they want with it. Of course, since OS X is made to only work with Apple boxes, customers who choose to install OS X on any other brand must support themselves.

May 01, 09 - 06:00 pm Comment from: Artist

I think it's Zunetang

May 01, 09 - 06:01 pm Comment from: Gabriel

@ rattymouse

Should RIM be expected to support people using their Blackberry OS on third-party phone hardware?

Should Sony be expected to support people using their Playstation OS on third-party gaming hardware?

Why, then, should Apple be expected to support people using their Mac OS X on third-party computer hardware?

May 01, 09 - 06:11 pm Comment from: Anonymous©

@ratmouse, aka Rudy Pedraza, the OS X for sale is an UPGRADE version.

May 01, 09 - 06:14 pm Comment from: My 2 Cents

@rattymouse

Should any cellphone maker be able to put the iPhone OS on their phone? I am sure there are a few that would LOVE to do that but, since Apple is the holder of the intellectual property rights of the iPhone OS they have the right to determine who will and will not be able to use and sell it. Same goes with the Mac OS.

May 01, 09 - 06:24 pm Comment from: AAPLguy

@ Gabriel

It's not really a question of Apple "supporting" OS X on other hardware (in the sense of making it work). I think OS X should be seen as something Apple has done to set it's computers apart from the other manufacturers. They spent their R&D;money to create a better experience for their customers. To say that Apple should have to license OS X to other Computer manufacturers is pretty much the same as forcing Coca-Cola to give out their formula to their competitors. It is the main thing that sets Apple apart from the other hardware manufacturers.

And it is no more unfair of Apple to withhold it from their competitors than it would be for Dell to write some piece of software for their computers and not license it to anyone else.

May 01, 09 - 06:43 pm Comment from: G4Dualie

It's taken a legal system to unveil this farce and the judge should put his foot up Predraza's ass.

It matters not if the Shadows move his cheese, cause if they hang psystar out to dry, Predraza is gonna squeal like the ratty mouse he is.

May 01, 09 - 06:44 pm Comment from: Noodle-Armed Choir Boy

Looks like Mr. Pedraza is beginning to sink and gulp water (or gulp something).

It appears he's found himself further down the pipe than he foresaw when he accepted the financial offer from the "still-unidentified ten 'John Doe' defendants".

I'll posit that his smooth-talking backers told him at the outset that if Apple did not settle out of court, he could just claim he forgot financial details, if the case went to court.

My guess is that Mr. Pedraza is experiencing a rising sense of panic and that he will soon request protection from the court, or try to strike a deal with Apple, in exchange for providing information about the person(s) who approached him in the first place, and gave him money to create Psystar and test Apple's software-hardware bind.

Oh, what a tangled web we weave
when first we practice to deceive.

I am thoroughly enjoying this.

May 01, 09 - 06:54 pm Comment from: KingMel

If a commercial entity sells computers running MacOS X, then consumers of those products will tend to contact Apple regarding problems that they might have with the software, regardless of the fact that it has not been applied in the intended manner.

The fact that Apple is not equipped to respond to these consumers does not appear to concern some people. Nor does the fact that Apple is not being compensated to do so (outside of the MacOS X purchase price). One might reasonably expect Apple to field more service calls for "operating system" issues on a Psystar box than a Mac purposely designed and tested for compatibility with MacOS X. Apple has no control over the compatibility of their software with a Psystar box.

Of even greater concern to me is the potential for disgruntled Psystar customers to blame Apple's MacOS X for their problems. This would degrade the value of Apple's brand and intellectual property and adversely impact Apple's expansion into the personal computer market.

May 01, 09 - 07:06 pm Comment from: Miami SPY

Yep, I'm close to Pystar.

Need a spy? I'm your guy.

They got a warehouse, trucks and a nice office building.

IP tag me and send a email. I'm game.

I'll eat lunch with them even.

Everybody's got to eat.

May 01, 09 - 07:06 pm Comment from: iPhoner

I think it's a combination of Octumom and OJ Simpson. Just a hunch. They've got the most to gain. Follow the money.

May 01, 09 - 07:30 pm Comment from: Bob

"High quality hardware" as compared to what?

Apple is a hardware company. Makes tons of money selling computers that run the operating system it created. Some little company of scumbags can't just steal the OS and sell computers running it.

May 01, 09 - 07:41 pm Comment from: Sir Gill Bates

So 80% think it's some kind of weird conspiracy huh?

Are we paranoid or what?

May 01, 09 - 07:42 pm Comment from: R

Psy-Star. Interesting name for a computer seller. Almost like PsyOps. Hmmm.

Psy-Star--> PsyOps--> Cyclops--> Cow Flops--> Prairie Pies--> Crap Cakes--> Bad Smells--> Sounds like DELLS!

It's obvious. Sony's behind this. wink

May 01, 09 - 07:42 pm Comment from: MacFhearghaile

rattymouse for frigtard of the year.

May 01, 09 - 07:57 pm Comment from: Roberto

At last something is happening; this has been dragging a long time and I want some action!

May 01, 09 - 08:00 pm Comment from: Sir Gill Bates

"rattymouse for frigtard of the year."

What, again?

May 01, 09 - 08:20 pm Comment from: dd

The mob is not gonna be happy. Rudy will probably disappear before the powers behind him are revealed. It's cool, though. If Psystar did win, I can start making fried chicken and sue KFC for their secret recipe. Hell, I'll sue everybody, since nobody has the right to patent anything made for, and used by, humans. Lol

May 01, 09 - 10:19 pm Comment from: rattymouse

There will be a LOT of strung out people if Psystar wins this case.

May 02, 09 - 01:28 am Comment from: Zeke

@rattymouse:

if Psystar wins this case every Apple stockholder will be able to retire within 12 months. Apple would be forced to license OS X. How many copies do you think they'll sell, given the reception Vista has gotten. Dell and HP aren't suffering because of the bad economy. They're suffering because they have no OS to put on their boxes that anybody wants.

May 02, 09 - 03:13 am Comment from: Again

I don't see how Psystar's finances are relevant to the case. For example in a medical malpractice or automobile accident case the court is actually forbidden from telling the jury how much money the defendant has, or whether they have insurance to stop any bias due to the defendant's perceived ability or lack of ability to pay. Also to discover information it must have some relevance to the case, you can't just be going on a fishing expedition through the other party's business. Unit sales might be relevant for Apple to show a degree of harm, but full financials, margins etc are not.

At some point, of course if Apple wins they might be important in terms of awarding damages, but Apple needs to win first. Do you think Apple would respond to a similar request from Psystar? Just because one party would like to know certain information doesn't mean they get it unless they can show how it might be relevant to the case.

"If it is indeed true that Rudy Pedraza either would not, or could not, answer financial information 90 times that would be bad for Psystar. If Rudy doesn’t know, who does? Is he protecting someone?""

Any lawyer will tell you in a deposition if you don't know the exact answer, don't guess. It's fine in a deposition to say you don't know the answer to a question if that's actually true.

"Why, then, should Apple be expected to support people using their Mac OS X on third-party computer hardware?"

No-one's asking them to support anything, just stop suing people who buy and use Mac OS X on 3rd party hardware.

"Should any cellphone maker be able to put the iPhone OS on their phone?"

The key difference is that Apple does not sell a standalone boxed version of the iPhone OS as they do with Mac OS X.

And yes, any cellphone maker should be allowed to buy genuine full copies of the iPhone, one per unit they sell, extract the software and install it on a clone device.

"the OS X for sale is an UPGRADE version."

No, read the license. It's a full version. Apple could change that any day. They haven't. They clearly have their reasons for wanting to keep it as a full version.

May 02, 09 - 05:19 am Comment from: twilightmoon

Sir Gill Bates"So 80% think it's some kind of weird conspiracy huh?

Are we paranoid or what?"


Can you give a reasonable and logical explanation how Psystar can afford such expensive lawyers for such a long, and drawn out legal case?

May 02, 09 - 05:23 am Comment from: twilightmoon

"if Psystar wins this case every Apple stockholder will be able to retire within 12 months. Apple would be forced to license OS X. How many copies do you think they'll sell, given the reception Vista has gotten."

If Apple cannot find a way to lock down Mac OS X to its hardware either by licencing restriction or by some other more draconian method of hardware or software keys or DRM, they will have to pull out of the computer business and focus on iPods and iPhones since profits will evaporate. Microsoft does make 80% of it's profits on selling Windows through other hardware makers, but that's on 95% of the market.

NO OTHER COMPANY HAS BEEN ABLE TO STAY PROFITABLE SELLING AN OS OTHER THAN MICROSOFT IN OVER 20 YEARS

You're insane if you think Apple can even recover it's R&D;costs by licensing to other manufacturers, let alone make a profit.

May 02, 09 - 05:28 am Comment from: twilightmoon

No, read the license. It's a full version.

You're whole post is riddled with holes, and I've poked through them numerous times here and I tire of doing it, but this part has been repeated a lot, and it's simply not true. You do not have a "full version" to use Mac OS X on non-Apple branded hardware.

It's licensed to be used ONLY on Apple hardware. Regardless of whether you call it full or upgrade is totally irrelevant unless you are running it on appropriate hardware.

If you do not like those terms, fine. Buy something else. Apple will not sue you for that.

May 02, 09 - 06:47 am Comment from: @TwilightTroll

"It's licensed to be used ONLY on Apple hardware. Regardless of whether you call it full or upgrade is totally irrelevant unless you are running it on appropriate hardware."

Whether it is a full version and whether it can be used on non Apple hardware are two are separate concepts.

The version sold in stores is definitely a full version. Of that there is no doubt. To repeat otherwise just keeps making you look stupid.

As to whether the Apple Hardware Only term is enforceable, well this court case will tell us that.

"You're insane if you think Apple can even recover it's R&D;costs by licensing to other manufacturers, let alone make a profit."

Being based on a free OS core, and the incorporation of lots of open source software, Apple has a completely different cost structure to Microsoft who develops the entire OS in house. Apple basically just wraps nice GUIs around other people's code and maintains a few apps. That's a completely different scale of effort compared to writing and maintaining an OS.

"If you do not like those terms, fine. Buy something else. Apple will not sue you for that."

Apple won't even sue me if I take my Mac OS X DVD and install it on a hackintosh. They're not that stupid. Personally I prefer to pay the Apple Tax and not concerm myself with the possibility of support and compatibility issues. Others with more time and less money may see it differently.

May 02, 09 - 06:48 am Comment from: almux

A good opportunity to get rid of some idealistic glance over a "nice free joung company triying to make Mac Os free on every platform"!

May 02, 09 - 07:56 am Comment from: rattymouse

TwilightTroll received a stiff and hearty beating here on this board. It is good to see Psystar supporters defending their RIGHT to use OS X in ways they see fit.

May 02, 09 - 09:25 am Comment from: Sir Gill Bates

twilightmoon,

"Can you give a reasonable and logical explanation how Psystar can afford such expensive lawyers for such a long, and drawn out legal case?"

Hey, I'm not saying it's not possible or true. It wouldn't surprise me at all if MicroSoft is somehow behind it. Heck, maybe Bill Gates has a new hobby doing covert ops with some of his pocket change.

May 02, 09 - 10:14 am Comment from: LordRobin

It is good to see Psystar supporters defending their RIGHT to use OS X in ways they see fit.

"Right" my ass. OS X belongs to Apple, not you. You have what rights they sell to you, no more, no less.

I swear to God, the entitlement some people feel they have makes me sick. "You worked your ass off to create that software/song/movie? That's great. Now GIVE IT ME! GIMMEGIMMEGIMME I WANT IT!"

------RM

May 02, 09 - 11:05 am Comment from: rattymouse

@ LordRobin

WRONG! and the copy of OS X on my TWO Psystar systems proves me RIGHT.

I PAID for it. I can do what I WANT with it.

May 02, 09 - 11:28 am Comment from: Sir Gill Bates

There is an interesting article in the June '09 issue of Maximum PC on building a Hackintosh. The key is a USB dongle made by EFI-X that enables a PC to fool the Software Updater into thinking it's a real Mac. You are limited to certain hardware components and the thing costs around $250, but I wouldn't mind building one myself.

http://efixna.com/Home.html

Would this be considered ethical?

May 02, 09 - 04:05 pm Comment from: Big Al

@ @TwilightTroll,

"Being based on a free OS core, and the incorporation of lots of open source software, Apple has a completely different cost structure to Microsoft who develops the entire OS in house. Apple basically just wraps nice GUIs around other people's code and maintains a few apps. That's a completely different scale of effort compared to writing and maintaining an OS."

First, I voted for Dell in the pole. I'd like to change that vote to Microsoft.

Second, that "other people's code" or open source code in the Unix core got a lot of input returned in the form of correction and adjustment from Apple and NeXt's engineers. In addition Apple and NeXt made a lot of proprietary code open source, Safari's code as well as Bonjour's code comes to mind, to add to the community that helped make the Unix base. Apple's and NeXt's open source input has far exceeded what Apple received in the Unix base. (Apple bought NeXt)

Third, one of Microsoft's talking points is that most of Apple's work on OS X was done for them but Microsoft has to start from scratch. So, obviously, @TwilightTroll you are a paid Microsoft blogger. Why does Microsoft have a dog in this hunt?

Fourth, Microsoft is under the delusion that if Mac OS X had to support all of the infinite possible hardware combinations on the face of the earth, like Microsoft does, Windows would have a distinct advantage over OS X.

Fifth, Microsoft is wrong, Mac OS X would only support those PC's with the fuggly Made for Mac sticker on them.

Sixth, Microsoft is the source of the Psystar funding.

May 02, 09 - 04:27 pm Comment from: Joe S.

@Again: I don't see how Psystar's finances are relevant to the case.

This is not a medical malpractice suite, but an intellectual property suit. Apple is claiming damages for each unit Psystar sells. The court has says Apple has the right to that information. That is an important part of the discovery phase of this trial and will enter into the damages portion. Just as Apple has to demonstrate intellectual ownership of OS X and Psystar has the right to see the documentation there. SCO lost, in part, because it did not cooperate during discovery.

May 02, 09 - 06:48 pm Comment from: shiva105

@Gabriel
"Why, then, should Apple be expected to support people using their Mac OS X on third-party computer hardware?"

Who said anything about anyone expecting Apple to support Pystar's computers? I certainly wouldn't expect Apple to support anyone else's hardware. And I certainly don't recall Psystar telling their customers to contact Apple for support.

@ My 2 Cents:
"Should any cellphone maker be able to put the iPhone OS on their phone?"

Well, since no one can walk into a store and buy the iPhone OS, no, of course not. Anyone can buy a copy of Mac OS X from lots of different retailers, though. And since there is no requirement for a buyer to show proof that they have a Mac in order to buy Mac OS X, the comparison is pretty much non-existent. Besides that, the Mac OS X installer does *not* require a version of a Mac OS to already exist on the computer you want to install OS X on. Maybe Apple calls it an upgrade version, but it acts as a full, stand-alone version of the OS in every regard.

May 02, 09 - 07:48 pm Comment from: @TwilightTroll

"Apple's and NeXt's open source input has far exceeded what Apple received in the Unix base. (Apple bought NeXt)"

That's not really true. Apple is much more of a taker from the open source movement than a giver. They suck in all the core OS improvements, but don't give out much new stuff. But that's fine. It's within the rules. Not very sporting, but within the rules. Just recognize it.

"So, obviously, @TwilightTroll you are a paid Microsoft blogger."

No, I can just recognize the truth. And it's not bad to use a proven Unix core improved and tuned over decades by others. But at least understand that's what you've got.

"Sixth, Microsoft is the source of the Psystar funding."

Yes, because what they really want is a court to rule that Apple must sell the OS to everyone and support it on any hardware. That just doesn't make any sense. Microsoft must be overjoyed by Apple's closed approach because they know as long as Apple maintains that stance, getting above 4% worldwide share is unlikely.

"The court has says Apple has the right to that information."

Have they? I thought the court was about to rule on the validity of Apple's discovery request. They'll likely ask Apple what they need and why it is relevant to the case and require only that information be disclosed. If sales volume is what they need, that's the only number they should have. If they can show they need other information to prepare their case they'll get it too. But they can't just go on a fishing expedition through every Psystar document in existence. Psystar's margins for example are irrelevant to any loss Apple may have sustained, as are Psystar's full financials.

"Maybe Apple calls it an upgrade version, but it acts as a full, stand-alone version of the OS in every regard."

No, Apple do not call it an upgrade version, Only the TwilightTroll and other people incapable of reading the license actually do. Apple calls it a full version. That's why there are no issues of copyright violation or stealing here.

It all pivots on whether the hardware restriction is enforceable. Apple thinks Yes. Psystar thinks No. A court will decide who's right. If there was no genuine issue to be decided here the case would have been thrown out long ago.

That said Apple may get Psystar on some of the minor counts, like using logos in advertising without permission. But it doesn't really matter. If Apple lose on the hardware restriction clause then the floodgates are open.

May 03, 09 - 01:43 am Comment from: Predrag

There's still extremely little likelihood that it would happen, if any common sense prevails in this case. If I remember correctly, it has already been ruled that the computer market does not only constitute a very narrow segment of desktop computers running Mac OS X. It is an entire market of desktop computers and operating systems. As such, there is no abuse of monopoly by Apple through restrictions placed on the OS distribution, since Apple does not HAVE a monopoly in any market. Psystar had plenty of choices for OS to slap on their cobbled-together boxes.

May 03, 09 - 08:51 am Comment from: @Predrag

"since Apple does not HAVE a monopoly in any market. Psystar had plenty of choices for OS to slap on their cobbled-together boxes."

The fact is however that Psystar's monopoly based claims are probably dead. That is unless Apple says something stupid like they're sponsoring a low OS X retail price development from hardware sales.

What Psystar is relying on is a much simpler aspect of contract law, that you can't put unreasonable terms is a contract and expect them to be enforced.

Their argument is that much like a book, a DVD, a car, a sack of wheat or any other product, once you sell something and get the price you ask for it you can't unreasonably control what the purchaser does with it. Psystar has a lot of case law on their side with that argument.

May 03, 09 - 11:42 am Comment from: John

Peestar is dead.

They willfully breached.

Now Apple is looking for co-conspirators for willful breach, and for some deep pockets to make Peestar and the ones behind this to hurt.

Irrespective of what others post in this column, Apple has its ducks in line, and no one can legally force Apple to "license" its OS. To think otherwise is convoluted, fantasy, and flies in the face of numerous Trademark, Copyright and other laws.

Apple will prevail, and getting discovery done now will enable them to slam the door hard on those responsible. No question whatsoever.

Sit back and watch.

May 03, 09 - 01:39 pm Comment from: @John

"Irrespective of what others post in this column, Apple has its ducks in line, and no one can legally force Apple to "license" its OS"

Actually not so, nobody is forcing Apple to license their OS. Apple is freely choosing to do so.

The dispute comes down to the enforceability of a term in that license.

"They willfully breached."

What the EULA? Don't you mean their customers willfully breached? Psystar isn't a party to that agreement. Therefore it's technically impossible for them to have breached it.

Even the RIAA gave up hunting down and torturing soccer moms and students eventually. Even if the "Apple only" clause is upheld, I doubt Apple has the stomach for what will be required to take on the customers of the next Mac compatible builder.

May 03, 09 - 04:39 pm Comment from: Predrag

To the person who signed his/her post as "@John":

from Apple's EULA for Leopard:

..."You agree not to install, use or run the Apple Software on any non-Apple-labeled computer, or to enable others to do so."

So, Psystar is clearly the enabler in this case, therefore also in breach of the agreement.

May 03, 09 - 05:55 pm Comment from: Question IS

If, now here me out,

this is not as crazy,

as it might sound.

But, just but, IF by some chance,

a rare chance in hell of course,

that a comet, or a downed military plane,

with the pilots safely ejected of course,

would to; keep up with me here,

would to crash into the Jackling House,

that's Steve Jobs house he wants to destroy of course,

and if this was to happen, completely destroying the historical house,

killing and damaging nothing else,

would and only would if this were to happen,

would there be a greater chance of OS X being released for generic PC's?

That, my idiot friends, is my question.

ponder if if you should, or could.

May 03, 09 - 06:20 pm Comment from: breeze

Pystar financial are very significant. There's no way they can avoid giving them up.

May 03, 09 - 06:41 pm Comment from: @Predrag

"Posting License Agreement:

You Predrag agree not to post to MDN or I @Predrag own your house, your car, the contents of all your bank and brokerage accounts and any other property you may have. Breathing in and out will signify acceptance of this agreement and will be regarded as the equivalent of posting.
"

Go on, post or breathe. After all in your words this is a legally binding agreement. It must be because I wrote it down.

"So, Psystar is clearly the enabler in this case, therefore also in breach of the agreement."

Not if they're not a party to it in the first place or if the agreement has ridiculous terms. I hope you see the point now. No PC manufacturer is bound by the EULA for an OS they install, nor is any person bound by a contract that they are not a party to.

In fact the EULA goes on to specifically mentions the situation If you got this software with hardware clearly showing it does not contemplate covering the hardware vendor.

If you don't agree, lets make arrangements for where you can send all your property.

May 04, 09 - 07:25 am Comment from: rattymouse

It is very satisfying to see Predrag get the beating here he so richly deserves. Psystar hardware, ask for it by name.

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