Intel's worst nightmare
AMD, the number two microprocessor maker in the world, says it has been the victim of unfair tactics by an unscrupulous monopoly. So it's striking back with an epic antitrust lawsuit designed to be Intel's Worst Nightmare. (Read the Story)

How strong do you think AMD's case will turn out to be? Is Intel playing fair in the chip wars? -- Roger Parloff, Fortune senior editor
Posted by Deirdre Terry 10:53 AM 56 Comments comment | Add a Comment

As the saying goes, where there's smoke there is indeed fire. Just ask the Fair Trade Commission of Japan.

Those within the industry are (painfully) aware of the way Intel uses its market power as a blunt instrument to sustain their monopoly power/profits. It used to be easy for Intel to write off AMD's complaints because they didn't compete in all segments and didn't have a truly different/competitive product until Opteron.

Since, 2003, AMD has succeeded in spite of Intel's efforts to foreclose them from the marketplace. AMD's current success should not be held against them when looking through the lens of the antitrust lawsuit and various investigations by global competition authorities into Intel's dubious business practices.

Even if a serial killer decides to end their killing, does that mean that society gives them a pardon? Of course not, we give them a fair trial and ensure they are made to account for their actions. Intel seems to be on a collision course for that reckoning, and we as consumers should benefit.
Posted By Trent, Santa Clara, CA : 10:50 AM  

They say absolute power corrupts absolutely. They also say you can't fool all the people all the time. The AMD - intel case likely reflects both of these sayings. Intel has already been convicted of some of the exact same behavior in Japan that AMD accuses Intel of doing in the US. Intel's response to the Japanese gov't was that it's misinterpreting the law. In other words "OK we'll stop in Japan if you say so but since we don't see it as illegal then let AMD litigate with us on a country by country basis. Until we are told to stop in each and every country we plan to continue the same old same old." So the liklihood that Intel is guilty is high simply based on their own admission of practices in Japan.

It's also important to note that AMD is not just going after Intel, it's threatening co-conspirators. Just like the police target both the drug dealer and the drug user, AMD is suing Intel and giving subpoenas to those allegedly accepting the illegal. Whereas Intel is big enough to defend itself, others do not want to tangle with AMD's crack legal team and risk the payment of treble damages that may be awarded by the Sherman act. As soon as those subpoenas went out AMD's fortunes started to turn. Some may interpret this as a de facto admission of guilt by Intel's customers. If that's the case then AMD may have promised not to sue them in return for cooperation in the case. If Intel's customers testify against it with the protection of amnesty then Intel may be in for a tragic outcome.
Posted By Kevin Cline Beaverton, OR. : 11:25 AM  

--I think that there should be a public disclosure of Intel's lobbyist donations,in what country they were made,and what effect it might have had.This might shine some light on why the case has been held up for so long.After US vs. Microsoft,one would think that regulatory agencies would be more interested in pursuing a claim like AMD's.
Posted By Marvin Baker,SF,CA : 12:27 PM  

As companies grow bigger and bigger, their downfalls also get bigger and bigger. Enron did just that. Microsoft also got anti-trust lawsuits and accusations in Europe. Intel? It's almost a given!
Posted By Peter, Houston, TX : 12:55 PM  

Can anyone name a business where volume discounts are not practiced? Retail, automotive, travel, banking, and even legal litigation all use price discounts to increase share. As long as the prices are not lower than the cost (dumping), it is legal, rational, and moral to lower prices. This does not decrease the abilities of the end customer to choose any more than Toyota's lowering prices on Camry's decreases the customer's abilities to buy a Mazda. Can anyone prove in any way how this hurts consumers? What AMD has done in design is wonderful and yes, it has made the market more competitive and therefore better than the customer. Intel's new chips look like they will also be incredible and should win share back for Intel if it's good for the end customer.

This is not in any way the same as what Microsoft or other monopolies did because it was legal moral, and good for the customer.
Posted By Darren, Chandler, AZ : 1:51 PM  

Looking forward I hope R&D will be maximized to make a more efficient microprocessor, our goal. I think AMD is now a major player in the arena and along with Intel can resolve co-development even though they are competing for market share.
Posted By Jeremy Swift Port Chester, NY : 1:51 PM  

I'm not sure what exactly is illegal here?

First off I'm not a Intel Fanboi, I love AMD and own 3 AMD based PCs in my own home.

With that said is giving discounts to companies to not buy from your competitors illegal?

Threatening to cut off their supply if they buy from another illegal?

Jacked up? Yes. Illegal? No if you ask me I mean this is what competition is supposed to bring out I thought, price cuts etc.

Now I realize it's unfair to AMD, cause they can't keep up with the intel giant, but that's hardly intel's fault. Should they be forced legally to 'play fair' ? To allow AMD to gain market share because they aren't large enough to compete?

Seriously at what market % do we say thats it's ok to continue growing and not ok?

I realize that if uncontrolled it leads to 1 company controlling a paticular market, but hello that is going to happen anyways with mergers etc. How many chip companies has Intel bought out? Or even AMD for that matter (ATI the most recent example).

It's the same thing in a lot of markets it's just moreso in the tech field. ATI vs Nvidia. AMD vs Intel. Microsoft vs... yeah that's right nobody.

Eventually someone is going to win, if not they'll both merge and both in (company wise... not consumer wise)

Competition is good, I know that. I don't know what the laws are regarding competition and monopolies, but most the stuff in the article that could actually be verified seem legal to me.
Posted By Rich, Springfield, VA : 2:02 PM  

Come on! If I recall correctly, for many years Intel was considered one of the best companies by Fortune, and furthermore, the former AMD CEO was named one of the worst CEOs in the US by Fortune for several years running. Let's put this in black and white - Intel is good at what it does and AMD is not. The latest Core 2 Duo processors kick the pants out of AMD (see ANY review on the new Intel parts and you will see this). Business is business. Only the successful survive. AMD is just looking for excuses to overcome their inadequate business acumen. As they say, if you can't beat them, sue them!
Posted By John - Beaverton, Oregon : 2:03 PM  

I have been saying for years that Intel is 10 times worse than the whole Microsoft "monopoly" ever was.

Every single aspect of Intel's business has in some way been underhanded.

You start off with their exclusive deals.

Telling companies basically, sell only our product or you will lose your discount and then you can't compete in the business.

Then you have them telling companies, okay well we'll pay for the majority of your advertising expenses if you use our product exclusively, we just want to put Intel all over your ad.

Then there is their pricing scheme, something which should make every single consumer hate intel.

Example:

Monday - Chip_X costs $1500.

Tuesday - AMD announces a new chip.

Wednesday - Chip_X costs $200.

Now, The way I see it. Any company who is overcharging their customers by that insanely large of a margin and is able to lower their price that much and STILL make a profit is simply a company I won't do business with.

AMD has been the savior of the computer world in my eyes. They have put the screws on an evil company and to this day continues to best them through good products.

I hope Intel gets SLAMMED for their actions over the last 20 years.
Posted By Marc Matthews, Lake Stevens, WA : 2:14 PM  

It is a normal and somewhat accepted practice by corporations with financial strength to successfully defend their wrongdoings in courts. Justice is not really justice because it is well mixed with politics, biases and the relationships between the leaders in this country.
I have no doubt that Intel counts on its financial strength when calculating risk vs reward when deciding to engage with antitrust practices. Microsoft case is a good guideline for them.
Posted By Alan Fani, Houston, TX : 2:17 PM  

As long as AMD can sell their chips and gain market share, I don't see how they can have a real chance or winning. If their share was growing smaller and smaller, due to Intel's exclusivity, then I would think they'd stand a fiar shot at a suit. I think Intel will come out on top on this one.
Posted By Perry, Camarillo, Ca : 2:29 PM  

Sounds to me like AMD is wining and running to mommy government to solve it's business problems.

The last thing AMD needs is for the big bureaucratic arm of the government getting involved in chip sales. Any time you get the government involved nothing improves. It costs taxpayers more, it costs customers more, and in the end all of the unintended consequences make things worse for everyone, including the one who went crying to mommy government in the first place.
Posted By James, Bettendorf, IA : 2:48 PM  

If Intel were to really indulge in Monopoly practises AMD would have been history. The fact that AMD has survived for so long is because Intel in not a monopoly and AMD is a good competitor
In Business giving discounts based on volume is a very standard practise and it is not considered monopoly. There has never been a situation in history when someone could not buy an AMD processor in stores because Intel forced them out. Infact, AMD processors enjoy a stronger retail market than Intel processors
Another point to note is that it is because of Intel that PCs have become so affordable and its usage is widespread across the Globe. They have driven down the price of PCs from 1970s through continuous R&D driving down the production cost year over year.
Posted By Narayanan Thondugulam, Santa Clara, CA : 3:46 PM  

AMD should look into how Intel got into the wireless market. Intel's first 802.11b offering and Centrino marketing came almost a full year after their competitors were already offering 802.11g radios to computer makers. How can a company offering a product 4 times slower get into the wireless business almost a year late? Real world performance 6mb for 802.11b and 23mb for 802.11g...channel bonding was not available yet. Basically offering an already obsolete product and banking on the brand to drive sales. You know what? Between their business tactics and branding a lot of ignorant (the real meaning of people who do not have enough information to make a sound judgment) people bought their branding scheme through HP, Dell, Gateway, etc. People went out in masses to go get their obsolete wireless product that was 4 times slower than the wireless offering that was available a full year before. I don't believe in conspiracies...but it makes you wonder why F.T.C. has failed to see something so obvious to every person who has their eyes open about how Intel conducts their business. Too bad our government doesn't have better accountability for their actions...voting some new corrupt loser into their place doesn't seem to build much confidence in the people who got them there...
Posted By Skeptic, Austin, Texas : 2:14 AM  

If Greenland ice sheet is melting, the ocean is rising. Nothing man can do will save New Orleans and other coastal cities. Rebuilding LA is a waste of money.
Posted By A.Rollings,Burke, VA : 11:38 AM  

It is a very sad day when the very best outcome for consumers is a glimmer of hope for a duapoly.
Posted By George Thinker, Plano TX : 1:10 PM  

In the interest of full disclosure, I am a veteran of considerable time at Intel, some of that time doing IT projects for their marketing department.

The one overriding policy Intel's senior managers always brought to the table was integrity and honesty.

I personally worked on computer applications which calculated sales, price discounts and price protection for Intel's distributors and never saw any evidence that prices were manipulated as described in this article.

That is not to say some over-zealous sales or executive person would not issue a gentle reminder to stick with their business but I have no reason to believe it was intentionally dishonest or illegal.

Management makes enough mistakes all on its own. I can't believe they (Intel) would intentionally try to instigate a program knowingly.
Posted By John, Chandler, AZ : 8:58 PM  

In some countries like India, there is a general perception that Intel chips do the best job and there aren't many takers for PC's powered by AMD. One reason AMD's market share could have dwindled in Japan could be the the feedback the PC makers received from it's markets.
If AMD based PC's are not selling, or not selling enough then it may not make enough sense to have an additional manufacturing line to produce an alternative product with different chipsets. It would require extensive training of an entire set of employees that would design, manufacture and service AMD based products. The article already mentions razor-thin margins for the manufacturers. Even an additional overhead of 1% could make it a losing proposition.
On top of that, customers who buy non-intel based products are generally expecting a bargain. So, revenue per unit is definetely lower for non-intel based PC's simply due to brand power or the lack of it.

Generally, in the tech sector, re-organization takes place pretty much simultaneously due to the intensely competitive environment. So, it is not surprising that 4-5 major vendors decided to yank AMD from it's product portfolio in one quarter.
Posted By Ronnie Dallas, Sunnyvale, CA : 7:22 PM  

Any company is going to use whatever leverage it can find to protect its lifeblood. I think AMD is being clever, milking it's traditional underdog status for sympathy while at the same time growing in strength technologically and financially. Intel is not being any less, or AMD any more fair than the other.
Posted By Denver Walker, Kingston, Jamaica : 9:09 AM  

Sorry, it IS illegal if you are the top dawg and are using 'unfair trading practices' to harm your single competitor. If we didnt have industry lap dogs and toady, sychophantic hand puppets (I'm being VERY charitable here!!) in Washington DC, MSFT would have been nailed to the cross here, just as the EU has done!

Sadly, many of you who bought into the Second Coming of St George (barf!) likely believe intel and microsoft are champions - once, yes,they were, but today, they are industry thugs who abuse market position to rob the consumer of choice, as well as dollars.
Posted By robert jay, puget sound, wa : 6:19 PM  

I think that intel has been the number 1 chip company for years for the following reasons. 1) Has better technolgy (except for the last few years). 2) Better startegic business practices in the for years that has enable the company grow and support worlwide demand.

As for anti trust issue, this is a lame attack for intel's credibility. AMD should play fair. Technology and better company management should be the game. NOT SOURGRAPING.
Posted By Rob, Portland Oregon : 6:30 PM  

I had the greatest experience of my life working for Intel from 1993 with the launch of the first Pentium processor until 2000 when I unfortunatley needed to leave California and Intel. It is a VERY competitive company both internally and externally. It is a company created by acheivers for acheivers. I was involved in the Intel Inside program. We tried to create a consumer brand and found a brilliant way to do it-- by paying for a portion of our customers' marketing expenses if they included our logo in their advertising (a practice that AMD copied.) And volume discounts are standard practice in all industries (and practiced by AMD.) The truth is that Intel and Microsoft are companies that have always excelled at delivering quality products. And when they lose market share, they do what any company would do, they compete to win back business. This isn't anti-trust, it is captalism at it's best. There is no collusion here, it is called competition. Right now and for several quarters, AMD has been gaining market share because they have a good product. When Intel responds with a better product or better pricing, AMD will lose market share. And the consumer always wins.
Posted By Eileen St. Louis, MO : 7:50 PM  

As a consumer, I want AMD's chips in my product. As an investor, I can't burn my fingers until the fire is out.
Posted By Marion Hotchkiss, Kaneohe, HI : 4:16 PM  

I have had the opportunity to use both AMD and INTEL products in systems for work and home. I have found the AMD technology to be faster and more robust yet be very cost friendly. This is a good change since an INTEL system would cost me lots more moola. Fair competition should be based on merit not by what can be bought. If AMD did produce a more superior chip then they should get kudos for doing their best. I for one would like to hear more about what INTEL's business model really has involved with it. I have seen INTEL chips go down against comparible AMD processors so somethings up.
Posted By Larry, DE : 10:43 AM  

AMD is finally in the game. Their claim is they were always there. But substandard processors, poor execution and inadequate capacity left them high and dry.
Let's say you only have one lemon-aid stand in a very good corner of the park cabable of producing 10 gallons per day. Then starting on the other side of the park but working it's way toward you is the super-whosit lemonade express truck supplying the whole park with the yummy drink. Is it undfair for the express truck to park near the stand? After all until the stand can compete it will only have its regulars.

AMD stop crying and start competing!
Posted By Larry Portland,OR : 12:57 PM  

I worked for AMD back in 2002. Everything was going well until the bottom fell out of the chip market. My fab was shut down and I was given walking papers. It was pretty clear to all of us at the time what was going on. It wasn't the first time Intel played dirty by using 'slash and burn' tactics to weaken AMD. And, contrary to Narayanan's comments above, Intel is smart enough to know that it needs AMD around (but a weak AMD), so it won't have the appearance of a monopoly and thus attract the attention of the government. It tries to keep AMD on a short leash and not allow them to grow too big. However, strong-arming customers and threatening suppliers hurts all consumers in the end. AMD is the only thing standing in the way of total dominance by Intel (much like Apple does against Microsoft) and I was proud to have worked for such a good company that respects it's employees and has very good products.
Posted By Armando Martinez, San Antonio, Texas : 12:59 PM  

This is another case of the loser trying to beat on on the winner. Intel got big by investing the most money and people and building the best products.
AMD does not like being second - so build better products and quit whining. The best product will win, since we, as consumers, will buy PCs with the best chips - so those who don't offer the best chips won't sell PCs - that will make them miss their estimates way more than co-marketing dollars.
Posted By Dave, Austin TX : 1:01 PM  

Where is the illegal coming from? I can't see it. I have used both AMD and Intel. I found the success of Intel comes from their quality and reliability of their products and marketing strategy.
What is wrong with rebate? All businesses have offered some kind of rebates. Are they all illegal?
I believe it coming down that attorney making the money, business owner and consumer are both losser in this battle?
Posted By Paul, Renton, WA : 1:01 PM  

Having followed AMD for about 15 years I am convinced of Intel's unfair practices. But not only that, Intel has strong partisan following among analysts. Whenever there is important AMD news something about Intel's alleged performance of something new is pushed. In the end it turns out as nothing much.
Posted By Hafner, Graz, Austria : 1:28 PM  

I think it is time for Intel shareholders to launch a class action lawsuit of their own against AMD for damages (to the stock price) caused by these frivolous lawsuits that AMD continues to file.
Posted By Ron, South Beach, Or. : 1:30 PM  

Is this really an argument? Any understanding of the history of this industry would show that AMD has historically had inferior products. Until the recent years, AMD's inferiority has been their downfall. Now that AMD has some really great products, they are gaining sales and market share. Even Dell is now selling AMD in all of their market segments! I do not see AMD winning this law suit especially since they are gaining market share--a gain that is only limited by their own capacity constraints. How can you say that your competitor is monopolistic when you are producing at capacity, experiencing record margins, and gaining in the market place?
Unfortunately for Intel, the only risk that they have in losing this case is their regain of market share due to the complete dominance of their new products.
Posted By Tom, Phoenix, AZ : 1:32 PM  

I own AMD and INTC. Have for years, though AMD has outperformed in recent years. Best way for me to play the chip sector. Intel had to protect market share, just like any large company in the face of a very aggressive smaller competitor. AMD was literally copycatting everything Intel did, from chip labeling to marketing to copying Intel's logo artwork method of advertising. I used to call them the copycat chip company. Hector Ruiz' advertising campaigns were all attempts to insult Intel using "soundbite" tactics; I remember vividly his "AMD gives you high performance at fair prices, INTC gives you fair performance at high prices" campaign years ago, without any statistical evidence. If INTC was cutting prices to keep market share, as AMD has often charged, this ad campaign can be seen for the silliness that it was.

AMD has for some time reached reasonable performance parity, even more, and has made huge inroads into server chip sales. I do view their constant lawsuits as a means of keeping Intel on the defensive and trying to limit and control Intel's current marketing efforts. Intel, like any large company, must use its muscle and its relationships with companies in the best interests of its shareholders and employees. To not do so is to concede market share and business to your rivals. No company can stay in business by doing that.
Posted By John Ziccardi Myrtle Beach South Carolina : 1:41 PM  

As a consumer, I want, demand systems that work! In my experience, Intel is a superior product. Every AMD I've owned has pretty much sucked and I refuse to pay less for a crappy product just because it's cheaper.
Posted By todd, huntington beach, ca : 1:42 PM  

Quite frankly, I am trying hard to side with AMD (Being a smaller player, I am giving benefit of doubt) but could not. History shows that until 2001 (Athlon) AMD products sucked and a natural dominance by Intel. Once Athlon was released AMD started gaining market share until Intel responded with superior Centrino and scaled up Pentium products. So the share of AMD dropped. Again in 2005 AMD had a stronger product line up in its Atholon 64... and started gaining market share for the last 5-6 quarters to reach historic highs. It now again started losing market share due to Intel's Core microarchitecture which is widely acknowledged as much superior to AMD's current offerings. This clearly proves that the Product superiority wins - which is the fundamental of Free Market. Using the law suit tactics just to distract the competition and gain market sympathy can take you so far - i would much rather concentrate on the product design and how best to serve the Customer with what they need. If Intel has that much control, how come AMD continuously gained market share in 2002 and 2005/2006?
Posted By Tad, San Francisco CA : 1:44 PM  

Intels likes to play dirty:

1.When it says that the max energy a CPU uses is for example 80 Watt, it means that "typically" it will not go higher than 80 Watt. But sometimes, say 5% of the time, it will. If AMD says their TDP is 80 Watt, it will NEVER go higher than 80 Watt. But most people compare both statements and don't realise Intel is fooling them.

2.Intel occasionally launches "new" products, which are just being rebranded and then sold for a higher price.

3.Intel launches benchmarks for their CPU's, stating that they beat AMD, but in reality they compare old AMD CPU's or only show you those benchmarks that are favorable to them.

And there are many more...

The point is that Intels monopolistic behaviour has allowed them to sell their products at higher prices, because they could force AMD out of the market. In the end, the consumer has always paid too much.

I never buy Intel, because WHATEVER BUDGET YOU HAVE, YOU WILL ALWAYS GET A BETTER PRODUCT FROM AMD FOR THAT SPECIFIC PRICE.
Posted By George, London, UK : 1:45 PM  

EXTORTION: YOU BUY MY PRODUCT ONLY OR YOU GET NOTHING! ISN'T THIS EXACTLY WHY NO CUSTOMERS HAVE COME TO AMD'S AID. IF AMD LOSES, INTL WILL MAKE SURE THAT COMPANY GOES OUT OF BUSINESS. AMD CAN'T PROVIDE ALL THE CHIPS NECESSARY TO CARRY ON THE CUSTOMERS BUSINESS, THEREFORE INTL HAS A STRANGLE HOLD ON THE INDUSTRY. "IF YOU BUY FROM AMD YOU GET NOTHING FROM INTL"
Posted By BILL MILLER, TIBURON, CA : 1:48 PM  

Intel has squandered billions on products designed only to lock out competitors.

This history clearly outlines their motives.

First dollar rebates are wrong... and especially wrong when you have 90% of the market.

I buy AMD everytime... they're the reason INTC is not trying to be competitive again.
Posted By Mike Luddy, South Hill, VA : 2:14 PM  

"Right now and for several quarters, AMD has been gaining market share because they have a good product. When Intel responds with a better product or better pricing, AMD will lose market share. And the consumer always wins."

To one poster, AMD started gaining shares AFTER the anti-trust lawsuit was brought forth... They had a better product and was losing market share.

Having no choice makes us (the consumers) lose. If it weren't for AMD, most of us will still be paying $800 for a processor. Competition is at the heart of our business, and what inevitably helps the consumers.

If you take a look at the evolution of the PC industry, everything has been commoditized, with Intel trying to reap all the benefits.

Centrino was the perfect example of how the consumer loses. Buying inferior products when there are better technology out there from Broadcom, Atheros, and the likes...

Viiv, Vpro... is all trying to do the same thing that the Centrino platform did... pushing obsolete products by Intel.

AMD on the other hand, is opening up the industry to 3rd party, and doing the very opposite of what Intel is doing... by differentiating the PC, and allowing customer a CHOICE!!
Posted By John, NYC, NY : 2:17 PM  

I don't know that AMD expected to win this law suite; however it is, and was, a brilliant move. Not only to check Intel's egregious practices, but to draw attention to the AMD brand. No amount of advertising could have done as well. Win or lose, it has served it's purpose.
Posted By Tom Prettyman - Redondo Beach, CA. : 2:28 PM  

Current and former Intel employees are nearly unanimous in their defense of Intel's alleged antimonopolistic practises. Intel is also now working the irrelevant defense really hard (it was irrelevant since now that AMD has better products they are gaining market share).

But as one customer's CEO said (paraphrasing, but the quotation has been posted on the web), "Intel told us that if we bought AMD server CPUs, we would not get any of Intel's best server CPUs that were in short supply. Losing the best Intel server CPUs would have crippled our server division, so we had to cancel the AMD purchase." Does that sound legal?

When AMD has the best products, that decision is irrelevant: "Buy any AMD server CPUs and we'll stop selling you our crappy ones". That's why the argument about AMD's recent market gains is irrelevant. It wasn't irrelevant in 2001, when AMD was competitive with but not clearly superior to Intel.

So far Japan, Korea, and the EEC has found Intel's practises questionable if not illegal. AMD is gaining market share not because they have competitive products at a better price (as they did for much of the time alleged in AMD's lawsuit) but because AMD has superior products at a competitive price.

And the nail in the coffin should be this: Intel has stopped doing the most onerous of its practises everywhere, which in my opinion is why Dell is now an AMD customer. Why would Intel change its discounts to "Buy 1,000,000 CPUs and get a discount" from "Buy enough CPUs from us to equal 95% of your sales and get a discount?" Sherman antitrust penalties triple if Intel continues those actions after the lawsuit has been filed. Thus, if AMD were damaged to the extent of $2 Billion (considering AMD went from as much as 20% to 0% with some Japanese customers when these policies were started, that is a ballpark estimate) then if Intel stopped breaking the law, then Intel might owe AMD $2B, a large amount of money, but not crippling so. But if Intel kept on doing those policies, then the subsequent damages could increase to thrice that.

Intel didn't stop its most anticompetitive practises because it was upright, moral, or a good guy. They stopped to reduce the risks of paying AMD a lot of extra money. Dell didn't suddenly decide to get AMD CPUs because AMD today is vastly superior. AMD had its biggest performance lead in 2004 and 2005; Intel's newest generations of CPUs, just shipped, actually look as good as or better than AMD's comparable products. Dell has gone with AMD because Intel stopped breaking the law to keep Dell Intel exclusive, and as others have commented, maybe to avoid being sued by AMD for accepting all of Intel's illegal bribes.

The lawsuit is certain to settle out of court. But the float on a billion bucks is probably cheaper than the lawyer's fees in fighting every issue, and the longer Intel keeps fighting, the likelier that they'll establish some middle ground position to use for their next anticompetitive action. Microsoft did the same thing twice; why not Intel.
Posted By richard, thousand oaks, ca : 4:09 PM  

It's a snow ball effect, the more money a company has the more it can do. Intel has made so many mistakes it only survives because of the money. IE, special cpu instruction sets in the P4's that was a attempt to get programmers to program exclusively for Intel's, that was a waist. It's failed attempt with it's 64bit Chip Itanium. The only reason they are surviving is that they are monopolist monsters. The only reason AMD survives is because it IS a better and smarter company. Only because of Intel's tactics does it continue to stay on top.

Intel has so much more money to spend on R&D you'd imagine that they would have a far far superior products by now but they don't. AMD has been smart with every step they take yet they can't benefit from it.

The concept that saving are only incurred if 80% of what a computer maker sell are Intels vs a saving scale of just units seems wrong to me.
Posted By Darren, Long Beach, CA : 6:07 PM  

Rich from Springfield VA posted:

"I'm not sure what exactly is illegal here?

First off I'm not a Intel Fanboi, I love AMD and own 3 AMD based PCs in my own home.

With that said is giving discounts to companies to not buy from your competitors illegal?Threatening to cut off their supply if they buy from another illegal?"

Rich, you ask a great question since it's absurd to expect that Joe Sixpack is well versed in business law. So to answer your question, yes, those things are highly illegal because they are deemed "anticompetitive". If you are really interested in knowing more, go read up on something called The Sherman Act. It's pretty well detailed on WIKI:http://en.wikipedia.org/wiki/Sherman_Act

Without such laws, the big guy gets bigger based on being big not based on having products and services people want. Such a thing was common in the industrial revolution and it slowed down our progress while unfairly lining the pockets of a few.
Posted By Troy, Athens Greece. : 6:08 PM  

The difference between Intel and Microsoft is that Intel trains its executives not to SAY things that sound monopolistic.
Posted By Mark, San Jose, CA : 7:15 PM  

If AMD wants to sell more parts all they need to do is match the price, that even they say has high margins already. AMD should spend more time on R&D and sales not lawyers.
Posted By phoenix, az : 7:56 PM  

As an investor in any company I expect that company to compete vigorusly, to grow and to out do their competition. To do that it only makes since that the customer is getting the best bargain by buying your product or they will go else where. Intel has failed in the last couple of years. I absolutely feel that Intel does't owe AMD anything and should be doing all they can to take business from AMD and any other compition they can. The customer that buys the product will come out better.
Posted By C Harris Decatur, AL : 11:34 AM  

doing tough business is not illegal, but when you're a monopoly and you do that anticompetitive stuff it is. intel is totally guilty and AMD knows where the bodies are burried.
Posted By brad, nj : 2:20 PM  

Well as an Intel veteran I can see how they bully vendors for their products, they do the same to their employees..captialism no, greed yes
Posted By Mohadeab, Aloha OR : 2:26 PM  

In the above replies I saw two false defenses for Intel that need to be cleared up. Some said that if AMD is gaining market share, then they don't have a case against Intel. That is patently absurd because 1) AMD would have gained MORE market share without illegal tactics, and 2) consumers would have had lower prices if AMD market share was even larger. During the period 2000 to 2005 the average selling price for Intel CPUs was at least $50 higher than AMD CPUs, so (2) directly follows from (1).

The second misconception is that consumers actually benefitted from Intel's predatory price cuts. The legal definition of "predatory" is either (a)"below the cost of production." or (b)dependent on competitor's market share. The AMD complaint contains several specific claims that Intel would reduce the price of ALL microprocessors ordered in a quarter if they met purchase targets at the end of the quarter, or, equivalently, that they would get a big chunk of marketing funds only if they met certain purchase targets. For example, Company A's average price would be $120 if they buy 0.9M CPUs (total cost $108M), but $110 if they buy 1M (total cost $110M). This makes the marginal cost of buying an additional 0.5M CPUs only $20 each, way below the cost of production. Illegal.

You ask, how does that hurt the consumer? If that practice were illegal, eventually AMD would gain more market share and Intel would lose it. Since Intel stopped this practice, indeed, this has already happened and the result is that the average selling price of COMPUTERS has dropped faster than ever over the past 2 years. Victory for the consumer BECAUSE of the lawsuit.

But does AMD have any proof of the retroactive price cuts? The FJTC DOES, and that is why Intel is trying with all their might to prevent the documents seized in a raid by the JFTC from being used as evidence in the US lawsuit. Even going to ridiculous extremes like saying that what Intel does in Japan doesn't affect the US consumer (funny, I *think* lots of Toshiba and Sony laptops are sold in the US, but I could be wrong!), so the evidence should be excluded. Intel will lose that argument and they will lose the whole suit.

Consumers have been ripped off by expensive Intel machines for a decade. At least $100 per PC -- 600M of them in the last 5 years, that makes $60B.
Posted By John Petzinger, San Diego, CA : 6:37 PM  

Having researched this topic throughly, reading both AMD's complaint as well as Intel's rebuttal and the relevant laws that apply, Intel is clearly in violation of the law. Specifically Intel has violations of the Sherman Act, the Clayton Act and the Robinson-Patman Act. Many of Intel's practices that were mentioned previously are illegal, specifically requiring OEMs to sign exclusive deals with Intel. Why do you think Dell was unable/"unwilling" to sell AMD products until they purchased Alienware? It is also interesting to note that since AMD filed its lawsuit, it has been able to increase its marketshare much quicker and gain access to several vendors and OEMs that previously declined to deal with AMD.

To those who do not understand the bulk discount thing, you are correct that it is legal to give a discount to buy in bulk. The problem is that Intel requires most companies to buy nearly 90% of their processors from them in order to qualify for the discount/rebate. A clear example of anti-competitive behavior can be seen where AMD offered HP 1 million FREE processors, but due to pressure from Intel and threats to cut HP's rebates, accepted less than 1/5th of them. Acknowledging that said behavior is fair is like giving a big thumbs up when gangs and mobster kill off their competition to take over their turf. Businesses are expected to behave ethically, and Intel has failed to show that it understand what fair competition is.

To the consumer, a monopoly is not always a bad thing. Monopolies can provide lower prices and usually meet the demand of customers. Unfortunately, monopolies do not always do this and can use their excess market power to drive prices up or manipulate the supply to alter demand. In some instance the government has allowed certain monopolies to remain, but these instances are few and generally are in industries that would be prohibitive for competitors to enter in the first place (most notably utilities companies). So for everyone thinking that Intel is on their side, maybe you should see who is really benefiting from their behavior, because its certainly not you. Competition drives innovation, creating better products. If Intel wins and AMD goes under, who do you think is really going to win? It surely won't be the consumer.
Posted By Bruce, Ft. Lauderdale, FL : 4:02 PM  

Intel makes better products; I would never buy a computer with-out an intel chip in it
Posted By Bob Smith, Seattle Washington : 3:27 PM  

Keep in mind that Intel's biggest problem may be the Transmeta lawsuit, not AMD. Trnasmeta is claiming not one, but TEN different patent infringements on a variety of Intel CPUs.
Posted By John Canon, Warren, MI : 9:14 AM  

Keywords in this whole convuluted mess..
"In 1993, McCoy began handling AMD's litigation against Intel (then over AMD's rights to clone Intel's 386 and 486 chips), and two years later he joined AMD as its general counsel. That's when he began hearing firsthand about Intel's practices, he claims."

*WHY* does AMD get to "clone" Intel's product? I remember companies wanted to "clone" Apple's Mac operating system, but Apple puit the kibosh on that. Does AMD exist BECAUSE of Intel?
Posted By Craig Chandler AZ : 6:44 PM  

i beleive intel has used some unfair business practices.. Threatening companies with not supplying then with the newest adn most up to date refroms in its technologies, if they dont continue to buy intels product. From what i can seee this must be illegal and there needs to be ahalt put to this type of practice
Posted By hampton ny : 3:21 PM  

In every business, there is competition. How you gain market share or increase your revenue, is dependent on how your convincing your sales force is coupled with good marketing campaigns. Instead of whining and grinding for so long, AMD should look inwards on how to improve their sales. It is as simple as that. If giving discount to OEM manufacturers ultimately convert to lower prices of pcs to consumers, why not. If AMD products are superior and lower cost, then why aren't consumers taking the bait? I have seen some of AMD ads from way back and I don't know what their PR folks are doing. Instead of blowing their own trumpet, they are criticising their biggest competition. When it is done too often, people really get sick of such comments. It is really high time AMD take control of their own destiny instead of blaming their competion for lost revenue
Posted By Diana Wee, Singapore : 9:30 AM  

It is purely jealousy and greeding of AMD to make a case like this. Fair competition is good quality and low price which eventually attract long term customers. I certainly will not buy AMD products because of their no value added legal battles.
Posted By Thomas Choi, Hong Kong : 10:57 PM  

As a giant stupid Gorilla, INTEL has never played fair anytime ever. It has always used unlawful practices to stifle competition. This is apparent not only in its Chip business but other ventures as well. In New Jersey there used to be a company called DIALOGIC Corp. As the name suggests, this was a Computer Telephony company. They made CT( Computer Telephony ) Boards (used in Panasonic, NEC, NORTEL, MITEL Switches ). Though a small company it did very well during the late 90s. In 1998 INTEL 'came calling'( as quoted by Mr. Howard Bubb, the Chairman of DIALOGIC at that time) and bought out DIALOGIC for about US $780 million. Then INTEL started its own culture and such idiocy advocated ideas at DIALOGIC. Before Intel took over, Dialogic had numerous Accounts. Such large and small Accounts together made DIALOGIC a whole lot of money. Once INTEL took over all such small Accounts were dissolved. INTEL-DIALOGIC began to cater a very few large Accounts. Eventually the small Accounts that INTEL forced DIALOGIC to dissolve went to other rival CT companies like Brooktrout etc. With the crash of ' DOTCOM ' and with AMD nipping at the tails of its chip business, INTEL dissolved all the great Talent and IT brains that DIALOGIC had by slow attrition. It came to a stage that INTEL gave credit to some of the great projects and development that took place at DIALOGIC to its own Oregon and Santa Clara centers. Slowly it turned DIALOGIC from a strong money making company to a useless substandard shell by its own dimwitted policies like " thinking inside the Box ideas. INTEL took over (bought out) DIALOGIC in 1999 for about 780 million dollars and now in 2006 (about 7 years later) INTEL is giving up and selling its INTEL-DIALOGIC wing to some no name company for about 50 million dollars.

This has been done by INTEL more than once. It did something very similar in Australia where they bought a progressive company and slowly turned it into a useless shell.
Posted By Maks, North Arlington, NJ 07031 : 3:18 PM  

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Market indexes are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer LIBOR Warning: Neither BBA Enterprises Limited, nor the BBA LIBOR Contributor Banks, nor Reuters, can be held liable for any irregularity or inaccuracy of BBA LIBOR. Disclaimer. Morningstar: © 2014 Morningstar, Inc. All Rights Reserved. Disclaimer The Dow Jones IndexesSM are proprietary to and distributed by Dow Jones & Company, Inc. and have been licensed for use. All content of the Dow Jones IndexesSM © 2014 is proprietary to Dow Jones & Company, Inc. Chicago Mercantile Association. The market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. FactSet Research Systems Inc. 2014. All rights reserved. Most stock quote data provided by BATS.