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  AMD doesn't trust Intel, should you care? 
  Jul 01, 2005, 07:30am EDT 
 
By: Sander Sassen

I'm sure you noticed AMD filed an antitrust suit against Intel, they even went as far as having AMD's chair man, president and chief executive officer, Hector Ruiz, post an open letter explaining their stance. AMD seems to be fighting for a noble cause; an open market where customers decide what to buy based on price, availability and performance. But are they? By reading the full 48-pages of the complaint AMD filed with the federal district court I canít help but wonder whether the crimes they accuse Intel of are commonplace in this industry, and many other industries for that matter.

Surely AMD wouldn't mind being in Intel's shoes, being able to strike deals with the likes of Apple, large OEMs, but also be viewed as the leading manufacturer of microprocessors that find their way into millions of PCs the world over. Wouldnít AMD want to be a household name or have a few product lines that are synonymous with computers for the majority of people? How many times have you heard someone ask for a PC with a Pentium processor versus people asking for one with an Athlon processor? Frankly Intel cannot be blamed for making the most out of their situation; if the roles would be reversed AMD would do the same, not doing so would be foolish, or in this case hurt revenue, profit margins and upset the stockholders.

Following that train of thought things would be worse if AMD was in that position as their Athlon 64 processor clearly is the better product and hence their influence and grasp of the market would be much bigger, and so would their monopoly. But in this case Intel wouldnít be able to file a lawsuit under the same conditions AMD has now. As Intel does not have a better product, AMDís monopoly would not deprive customers of a better computing experience by choosing AMDís products, as they have the better product, hence the point would be moot.

The mechanism of an open market works by the three key factors I described above; price, availability and performance, at least for the product category, processors, weíre discussing here. Despite not being able to offer the best performance Intel has been able to outclass AMD in price and availability, especially when looking at the deals it has made with large OEMs and recently Apple. But thereís a fourth factor that Intel has mastered throughout the years and which is abundantly clear when someone asks for a Pentium processor when buying a new PC and thatís marketing. Frankly Intel has had an excellent track record when it comes to creating market demand by tailor-made marketing campaigns for their products.

AMD however has, by comparison, done very little to promote its product to the general public. It then isnít surprising that the OEMs pick the well-known Intel or Pentium brand for their PCs as that would fit better with what the general public would like to buy and hence would guarantee better sales. Naturally it is an added advantage that theyíve been doing business with Intel for a long time and know that it is capable of on-time, volume shipments and hence is a reliable partner. AMD has yet to prove itself in many areas, which can be a cause for headaches if an OEM orders a few hundred thousand processors on a strict deadline.

But to get back to the complaint filed and the claims within. Has Intel, for example, instructed OEMs to not deal with AMD in risk of losing certain exclusive deals? Probably, but thatís just an instrument to protect your own market, and commonly found in other industries as well. What if some TV manufacturer decides it doesnít want to use brand X tubes exclusively but also wants to use some from a 3rd party manufacturer? You can rest assured brand X wouldnít be happy and probably re-negotiate their deal with the manufacturer, or deny him exclusive deals if he does proceed with ordering from the 3rd party. And all the other complaints? Probably true as well, to some extent, but I honestly do not feel that thatís where the problemís at.

AMD needs to be much more proactive with their marketing, as despite their better performing products available at the same, or lower price as Intelís the majority of people buying a PC still ask for one with a Pentium processor. As long as the general public views the PC as something that needs an Intel processor to work best I guess AMD has their work cut of for them. And honestly I can tell you theyíve not been very good at it sofar, for example just look at the AMD content featured on this website. There isnít much of that, and not because we do not want to work with AMD to evaluate their products, but simply because AMD never bothers to reply to our emails, send samples, invite us to press events or keep us in the loop about their latest technology.

But thatís probably where this antitrust suit is all about, as marketing at the scale that Intel is using to promote their products is costly and could probably be far too costly for AMD to attempt. Hence they try another angle; trying to win the general public over by depicting themselves as David fighting Goliath. A lawsuit and the resulting costs are chickenfeed compared to what a succesful marketing campaign will cost to convince the general public AMD has a better product at lower cost. That the lawsuit also serves to smear Intelís business ethics, hurt its public appeal and possibly affect its stock price is probably viewed as an added advantage by AMD, so much for fair play and trying to establish and open market.

Sander Sassen.

 

  Comments 
 
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Re: AMD doesn't trust Intel, should you care? I care Christopher Fields 15 replies Oct 01, 2007, 11:04pm EDT
Re: AMD doesn't trust Intel, should you care? Christopher Fields 0 replies Feb 11, 2006, 01:06pm EST
Re: AMD doesn't trust Intel; I care a lot! Radomir Jordanovic 0 replies Jul 04, 2005, 03:34am EDT
Re: AMD doesnít trust Intel, should you care? Dave East 81 replies Mar 29, 2006, 02:15am EST
Re: AMD doesnít trust Intel, should you care? amdfreak22 23 replies Sep 10, 2005, 07:38pm EDT

 

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