Apple issues ultimatum to Pegatron over ASUS MacBook Air knockoffs: Us or them, take your pick

“Apple has reportedly moved to curb the production of new ‘ultrabook’ portable computers by Taiwanese technology giant ASUS, by forcing its manufacturing partner Pegatron to choose between production contracts for the two companies,” Matt Brian reports for TNW.

“Chinese publication Commerical Times reports that Apple pursued Pegatron after becoming frustrated by the similarities between its MacBook Air and ASUS’ Zenbook, which utilises Apple’s familiar aluminium unibody construction,” Brian reports. “It is believed that from the end of March, Pegatron will cease production of ASUS’ Zenbook, resulting in a move to rival manufacturers Compal or Wistron.”

Brian reports, “Given Apple’s buying power, a contract from the world’s biggest technology company is likely to be held in higher regard than one of its rivals… It’s an interesting move, some would say anti-competitive. The PC market is in decline yet Apple’s notebook sales continue to defy the trend — if the reports are true, Pegatron knows which horse is on to a winner.”

Read more in the full article here.

MacDailyNews Take: You know what’s really anticompetitive? Stealing Apple’s innovations in everything from OS to industrial design for the last 30 years, churning out knockoffs, and peddling it to the ignoranti.

Enough.

Apple has earned their power and, after years of being ripped off, more than earned the right to deploy it at will. Kudos to Apple for playing some hardball.

Hopefully, behind the scenes, they’re giving Samsung, Intel, etc. the same type of stark choices.

[Thanks to MacDailyNews Readers “Dan K.” and “Ed” for the heads up.]

Related article:
Intel fakes ‘live’ Ultrabook demo, mulls massive advertising campaign to peddle ‘MacBook Air killers’ – January 10, 2012

63 Comments

  1. They are likely to find alternatives to Samsung in next few years. They have 100 billion to spend to find replacements. Samsung is going to rue the day they messed with Apple, just watch!

    1. Oh and it won’t be just the loss of manufacturing parts for Apple. Just watch, you will see Apple put the screws to Samsung and the big profits Samsung stole will evaporate and very likely could end up back at Apple after the proper court battles.

    2. Don’t forget that every time Apple finds alternative suppliers to Samsung, not only are Samsung weakened, but also that rival becomes a great deal stronger.

      Samsung’s behaviour towards Apple is appalling and it should send a very clear warning to any other major manufacturer who considers dealing with Samsung.

    1. Uhm, this is the Taiwanese Commercial Times, hardly a reliable source. Microsoft still throws around their weight like this. They pulled their usual, install ONLY Microsoft OS software, on netbooks, or pay full retail. Notice how quickly the netbook market went from Linux installs to Windows.

    2. Hate to say it, but yes Apple would likely lose if it went to court.

      Doesn’t matter if the designs are almost identical, AFAICT Pegatron is simply producing unibody units based on specs from ASUS. If Apple has a problem with this they should be taking ASUS to court, not forcing a manufacturer to choose between two clients. That IS anti-competitive (note, I did NOT say monopoly abuse, one can happen without the other).

      This would be like forcing Foxconn to choose between Apple and Dell, HP, Lenovo, etc. The only differences are Foxconn is much bigger than Pegatron, and Dell, HP, etc are much bigger than ASUS.

      1. Nope.

        If I want to buy my dinner at McDs I get it at McDs, if I want Taco Bell I get Taco Bell. The mere idea that a court can “force” Apple to buy from a manufacturer for any reason is absurd.

        1. That is NOT the argument, you have it 100% backwards.

          If Apple just pulled its business from Pegatron no one would have a legal leg to stand on.

          But if this article is true, then the argument is whether Apple can use its larger work order to force the manufacturer to NOT accept business from another company.

          Pegatron is not a law firm, there is no inherent conflict of interest if they do business with both Apple and ASUS.

          1. There certainly is. Did Apple help fund the equipment Pegatron is using to produce knock offs?

            Even if they didn’t Apple can play hardball with manufacturers same as you can play hardball when you negotiate a contract with anyone. A customer should always get the best deals from their suppliers.

            Keep in mind, Apple is not saying Pegatron can’t manufacture for Asus, just that Apple will chose snort supplier. That’s hardball but it’s perfectly fair and reasonable.

          2. “the argument is whether Apple can use its larger work order to force the manufacturer to NOT accept business from another company.”

            There is no argument. Every customer has that right. Period.

          3. The problem is Pegatron using what it has learned of Apple’s design to potentially help ASUS build competing products. I’m sure this has much more to do with sharing or leaking Apple’s manufacturing secrets or designs to its rivals and less to do with simply assembling laptops.

            Apple’s MacBook Air designs are very technical and complex. Very few computer manufacturers would put the resources or time into developing such technology and processes, and if Pegatron is sharing or giving them away to Apple’s competitors so that it can secure more contracts, then Apple has every right to threaten to take its business elsewhere.

            Plus, there are many, many other assemblers who would LOVE to have Apple’s MacBook Air contract. Much more than ASUS’ contract.

            1. Apple has considerable patent protection on this process which clearly Pegatron is using to produce the. Apple would never put a us or them threat to them as such so illegality does not apply. The question would be:
              1) Simply implying that Apple are free to take their business elsewhere allowing P to choose but unable to shout foul which is done all the time.
              and/or
              2) Pegatron are told that they are in breach of Apple patents in the process of making such products for others and will be subject to prosecution if they keep doing so.

      2. This would be a good reason for Apple to move manufacturing in-house. Contract assemblers really need to keep their focus on what they do and not compete with their customers. If Apple can’t trust them to protect Apples IP, they risk losing it all. Apple invented the unibody case for note book computers. Manufacturing millions of THIN computer cases took a lot of manufacturing technology development that was probably funded by Apple. For Pegatron to share that with ASUS is just theft.

    3. My memory is foggy, which is nothing new, so please refresh it regarding when Microsoft put an ultimatum out there saying it is us or Apple to one of their manufacturers?

      Sure Apple and Apple fans screamed bloody murder, but for other things…

      Unless you can jog my memory with a little something more than “When MS used to throw their weight around” and I am being serious. I’ll agree with your statement of implied hypocrisy if you can provide me a scenario or some bullet points, thanks.

      1. msft did all the time but worse.

        like they blackmailed OEMs not to put IBM’s OS/2 onto their computers, if they did so they would pay more for Windows or even not be sold Windows. OS/2 which many say was superior died.

        in the end Msft was sued and lost:
        from Msft’s own website:

        “Today’s settlement resolves claims arising from the United States v. Microsoft antitrust case in the mid-1990s, where IBM was identified in U.S. District Judge Thomas Penfield Jackson’s findings of fact as having been impacted in its business by certain Microsoft practices. Under the agreement, Microsoft will pay IBM $775 million and extend $75 million in credit towards deployment of Microsoft software at IBM.

        In addition to addressing all discriminatory pricing and overcharge claims based on the findings in the U.S. antitrust case, the settlement resolves all antitrust claims, including claims related to the IBM OS/2 operating system ”

        http://www.microsoft.com/presspass/press/2005/jul05/07-01msibmsettlepr.mspx

        Many companies smaller than giant IBM were treated worse but didn’t have the resources to fight Msft.

        1. just thinking about it there are differences between Msft and the OEM OS/2 case and Apple’s

          The OEMs were buying from Msft and msft were using their monopoly position to stop them buying from someone else.

          apple is actually contracting (or ‘buying) with Pengatron i.e Apple (in the reverse of the Msft case) is the customer. Many companies actually have restrictions on their suppliers or agents, for example I worked for ad agencies. Clients won’t let the agency work with competitors or even clients to which they are ethically opposed (for example if an agency had Greenpeace I doubt they would let the agency take on Exxon). Apples situation is of course a bit different but I think as others have pointed out Apple’s issue with Pegatron has to do with engineering processes that apple pioneered.

    4. I disagree. Apple is the aggrieved party here. They give Pegatron a contract to manufacture MB Airs, and then Pegatron shiws their gratitude by accepting a contract from ASUS to build Air knock-offs. Pegatron was both stupid and greedy to believe Apple, or any business partner, would put up with that kind of duplicitous double-dipping.

        1. Not only do Apple own or part own the milling equipment, it was most likely funded by Apple and Apple own the IP for milling from a block of raw aluminium along with other patents relating to internal layout, layering of components and component anchoring.
          Depends I guess, on Asus having re-engineered those aspects and how much it copies Apple’s construction designs.
          Let another round of dumping on Apple commence, justified or not, we all know the way this will be spun by the haters.

          1. I’m not sure if I could find a link but I remember reading about How Apple had purchased a large fraction of the worlds aluminum milling equipment. If this is Apples equipment being used I would give them one day to shut down ASUS laptops with it or pull the equipment out of the plant and terminate the contract and then sue Pegatron for damages and breech of contract.

      1. It’s business. There’s no such thing as gratitude or loyalty between companies.

        Unless Apple actually owns the equipment used to manufacture unibody laptops like twilightmoon suggests, Pegatron is well within its rights to accept business from any company, and manufacture according to the specs given to them.

        Like I said earlier, if Apple has issue with ASUS they should be taking them to court.

        1. Of course Pegatron is free to accept contracts from other companies but I’m guessing that it’s more than just knock-off concerns. If the machines being used to produce for Asus, impact negatively on Pegatron’s ability to supply Apple, then they(Apple) would be totally within their rights to demand the most resources….assuming those resources are part owned/funded by Apple

        2. To be fair I did read they had purchased a lot of it but I do not know the details and I can’t prove that Apple owns or partly owns this equipment, nor what the terms of a likely confidential contract.

    5. Taken to court for what, protecting itself from being ripped off? It isn’t anti-competitive if you’re being stolen from!

      Look and the ASUS ZENBOOK and compare to the MacBook Air, then honestly try to write what you wrote again with a straight face.

      This is completely different than the anticompetitive crap Microsoft used to pull. This is Apple trying to use any means it can to protect its intellectual property and the tremendously valuable brand image (and business) it built from companies like Asus, HTC, and Sumsung – companies engaging in outright theft.

      All ASUS had to do was use an original design on their ultra book instead of stealing from Apple, and we wouldn’t be having this discussion.

    6. Let’s see: Microsoft had a monopoly, Apple does not.

      Besides which, any company, even a monopoly, has a right to choose its suppliers. Apple’s simply saying it won’t buy from a company that’s heavily leveraging its IP for other customers.

    7. It is not uncommon for companies to contractually prohibit vendors from simultaneously serving competitors. There are many instances where the potential conflict of interest is significant.

      Note that Apple gave Pegatron the choice.

  2. Everytime I read something like this, it reminds me of a VW Golf add in the UK. A sleazy looking salesman tells his customer while closing the door of the Golf wannabe: “If you listen carefully, it sounds just like a Golf”

    Who buys #%^* like that? Even if it looks like an Apple product, it is not because it doesn’t have the same quality hardware and OS! Wake up, people!!

  3. From their website:

    The ZENBOOK™ is a far cry from commodity notebook PCs that are built to simply get the job done. It’s an exercise in philosophy, created by people who spend much time and effort to find a balance between technological advancement and better living. While the modern era is typified by rapid change and upheaval, the ZENBOOK™ epitomizes tranquility that seamlessly integrates with the lives of users. It is an initiative to fuse beauty, strength and stability in pure unison, built on new values, and evolved for a new age where finding what’s truly important in our lives is more vital than ever. It is the world’s first PC that encourages people to seek greater meaning in their interactions with technology, rather than simply offer new gadgets. Simple, subtle but totally sophisticated, the ASUS ZENBOOK™ can be your companion and guide in this new phase of technological evolution.

  4. I don’t agree with it if true, but given the source, I don’t believe it’s true. Apple is under constant scrutiny due to its market power. For them to stoop to such tactics would be as stupid as it is unnecessary. It’s just as likely ANUS planted this in an attempt to keep Apple from using someone else.

    This stinks like fishwrap headline baiting and nothing more.

    1. Then you don’t know business. If Pegatron is sharing Apple’s design secrets and processes with ASUS, then Apple has every right to force Pegatron to stop such behavior. There are probably clauses in Apple’s contracts which require Pegatron to keep Apple’s secrets confidential.

      This is simple business. Apple has clout here, and it’s using that clout to its advantage and for the protection of its products.

  5. If this story is true ( and that’s a big IF ), I don’t like the way that this looks. It will be seized on by Apple haters and used to make Apple look afraid of competition.

    Although the product may well be a poor copy of a MacBook Air, it makes it look as though Apple has something to fear.

    I would rather that Apple beat it’s rivals in a fair fight – even when those rivals are unfairly copying Apple.

    1. I don’t care about appeasing Apple haters. Useless bunch of closed minded imbeciles. Let them froth at the mouth. Apple is the big dog in town now. Get used to it and like it.

    2. You’re assuming ASUS came up with its design and production methods on its own. If Pegatron shared Apple’s processes and design with ASUS in violation of its contracts with Apple, then Apple has every right to force Pegatron to stop.

      Apple’s not afraid of competition, but legitimate competition means that ASUS would develop its own designs. There’s a big reason why ASUS chose Pegatron to manufacture it’s MacBook Air competitor, and it’s not that there’s a lack of laptop manufacturers around.

      ASUS chose Pegatron because Pegatron is using what it learned from Apple to help ASUS make its MacBook Air fighters. And Apple isn’t going to stand for that.

  6. This report is full of it. There is NO WAY Apple would open themselves up to the lawsuits and anti trust that would occur. Guaranteed Asus is losing money trying to copy Apple and shut down their production themselves. Commercial Times is just putting their own idiotic spin on it.

    1. Sorry, Pegatron was helping ASUS with its product by sharing Apple’s design and production secrets. That’s why Apple is so pissed.

      Plus, Apple would be fully within its rights if its contract with Pegatron stated that Pegatron had to keep Apple’s designs and production processes secret, which I can’t imagine Apple not having in its contracts in a major way. That would put Apple in the legal driver’s seat and Pegatron and ASUS on the losing end of any lawsuit.

      More importantly for Pegatron, it likely gives Apple the legal right to terminate its agreement with Pegatron and move production to another, competing manufacturer. That would hurt Pegatron MUCH more than any lawsuit.

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