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Why compete when you can litigate

In an effort to thwart its largest competitor, AMD has been continuing to serve up subpoenas to various companies. Among the new companies receiving subpoenas are: Adobe, BEA Systems, Dell, HP, Sun Microsystems and Wal-Mart. According to AMD, the subpoenas are used to reveal and prevent unfair methods of competition by Intel. AMD legal representatives state that "Intel's conduct has unfairly and artificially capped AMD's market share and constrained it from expanding to reach the minimum efficient levels of scale necessary to compete with Intel as a predominant supplier to major customers."

Intel too now has joined AMD in handing out subpoenas. Intel representative Chuck Mulloy indicating that Intel practices its business in a fair and legal manner and that its own subpoenas are merely part of a discovery process. Intel has been sending out subpoenas to many of the same companies that received them from AMD. Despite Intel claiming fair business practices, earlier this year its offices in Korea were raided by the Korean Fair Trade Commission for monopolistic practices. Intel was also ruled to have violated business practices in 2005 by a Japanese court. Earlier that year, Intel offices in Europe were also raided by the European Commission for an ongoing anti-trust case.

Earlier this year, DailyTech reported that AMD has served out subpoenas to Microsoft. The software giant was asked to deliver documents to AMD showing details as to the development of Windows for 64-bit AMD processors and what factors Microsoft considered during the development. AMD was also interested in any emails or documents that Microsoft used to determine performance and value differences between AMD and Intel processors. Skype was also another companied who was handed a subpoena from AMD when it launched a version of its VoIP software that contained Intel-only features. AMD argued that Intel had used its size and resources to pressure companies such as Skype into developing Intel-only features that would otherwise also normally work on AMD processors.

AMD's market share actually increased to 21.1% for its processors at the end of this year's first quarter as opposed to sitting at 16.9% for the same quarter last year.  AMD and Intel are currently on the eve of a price war between desktop components.

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Remember Windows/OS2 legal issues??
By othercents on 6/23/2006 11:29:29 AM , Rating: 2
I remember there being a lawsuit that changed the way Microsoft did business with PC manufacturers. Microsoft use to have an agreement with PC manufacturers giving discounts on their Operating Systems if the manufacturers didn't sell any other OS. This was definetly an issue with OS2 since many manufacturers wouldn't sell OS2 because they would loose their Microsoft pricing. After the lawsuit Microsoft lost, but really they won because they own the market and there isn't much competition anymore.

This is the same issue with Intel. If Intel can force PC manufacturers to only use Intel processors then they can strong arm the market and keep AMD at a competitive disadvantage. For those people don't think this could happen and everything is fair then you need to open your eyes. If Intel only has to send a message to their manufacturers and threaten them with increased pricing so that Intel keeps a higher market share. Then they will.

Other




RE: Remember Windows/OS2 legal issues??
By Pythias on 6/23/2006 12:10:20 PM , Rating: 2
So its illegal if I dont offer discounts to people doing business with my competitors? What a load.


By Bull Dog on 6/23/2006 12:11:15 PM , Rating: 2
Amen.


RE: Remember Windows/OS2 legal issues??
By Panurge on 6/23/2006 12:21:31 PM , Rating: 2
quote:
So its illegal if I dont offer discounts to people doing business with my competitors? What a load.


It is illegal. If you are large enough to ensure that, by offering a discount to companies that only hold your product, the other products cannot be sold, then your are engaging in anticompetetive behavior.

This is not the same as two companies with equal shares of the market trying to gain small advantages. The price wars that are coming up come from this healthy competition.

Discounts should be given for what a company does, not what they don't do. Give discounts for selling a large number of Intel chips per year. Don't give discounts that encourge not selling other products.


By othercents on 6/23/2006 12:38:22 PM , Rating: 2
Exactly. This is anti competative behavior.

Lets put it this way. Two people own car dealerships in a small town. One of the dealerships is bigger and has discounts with most the big companies in town. To keep these discounts the companies have to exclusively purchase from them regardless of volume. The smaller dealership is very competative and can provide great pricing, but can't sell to the large companies in town because of this discount. Its not because the products are not as good, or because the price is higher. It is only because of the discount agreement.

This is an unfair practice. Microsoft did it, and I'm sure other companies have done it.

BTW: Most large companies have their own Law staff in house so don't think that some cut rate lawyer is charging special fees for these lawsuits.

Other


By bldckstark on 6/23/2006 12:29:51 PM , Rating: 2
IT is not illegal to offer discounts to companies you do business with, and AMD agrees on that point. It is illegal if you are a monopoly and use your size and power to artificially cap another companies market share or block thier entry into a market. RTFLawsuit. It explains the difference between standard business practices and those that must be upheld by a monopoly. If Intel is not deemed to be a monopoly, then the entire lawsuit is without merit.


RE: Remember Windows/OS2 legal issues??
By JamesCurtis on 6/23/2006 12:39:42 PM , Rating: 2
Discounts themselves are ok, but when the discounts put competitors at an unfair disadvantage then the problems start popping up. You have to make it an even playing field so that all companies can enter the business and have a chance. If intel's discounts and behind-the-scenes deals are keeping AMD from being competitive, then by all means I think that this should be investigated. Unfair business practice shouldn't be tolerated, especially on such a large scale ;)


RE: Remember Windows/OS2 legal issues??
By JNo on 6/26/2006 7:40:04 AM , Rating: 2
Yeah the issue is not that discounts based on volume were being offered by Intel, which is fine and dandy, but that its customers were only eligible for the discounts if under the stipulation that they bought *NO* AMD processors. This is the part which is anti-competitive and illegal, especially when being flexed by a technical monopoly as it is an illegal barrier to entry in the market place.


RE: Remember Windows/OS2 legal issues??
By z3R0C00L on 6/23/2006 4:14:39 PM , Rating: 2
I'm sorry but that's BS. Business is business. You want to take on Intel then do so. If you're there competing with a big guy (like banks do) then you should be able to use any available tool in your arsenal that is deemed legal (like discounts). One should be able to say (if you deal strictly with me I will cut you a deal) WHY? because if they deal strictly with you you sell more volumes therefore you can afford to hand out a larger discount.
It's up to the competition to do the same. I don't like RAMBUS, AMD, SCO, Creative and others business practice of suing your competitors and crying like a little baby. Capitalism is built on free enterprise. Compete or die. AMD HAS NOT BEEN dishing out the same level of discounts. There own fault. Intel had to take quite a few hits in order to afford to build all there fabs and re-structure the company many times over. This is why they can afford there discounts.


By Targon on 6/23/2006 5:14:23 PM , Rating: 2
You are correct in some ways, but the issues involved with the AMD vs. Intel case go beyond the normal "Intel is larger so has advantages as a result".

If Intel were to offer special prices to be exclusive, that's normally an acceptable business practice. But to say that Intel will revoke special rebates if a company sells more than X percent products based on AMD processors, that isn't acceptable. It goes beyond volume discounts or exclusive deals in that sort of case. If Intel suggests that shipments will be "delayed" if AMD products are sold, that is also an unfair business practice.

It should be noted that even though AMD has gained a lot of market share recently(since the AMD lawsuit started), Intel's behavior prior to the lawsuit is really a BIG issue. How many billions of dollars has AMD lost in terms of growth due to Intel's business practices? That's the question here, and needs to be looked at.

Most similar cases come to trial after the original plantif has gone out of business or exited the market in question, so in the long run, the damage goes beyond the point where awarded money can repair any damage caused. The reason this is such an important case is that AMD is doing well as a company, so any damages awarded, if any, will help AMD compete in the future.


Misleading title
By schwinn8 on 6/23/2006 11:18:40 AM , Rating: 3
The title implies that AMD cannot compete, and is instead litigating to make ends meet. This is clearly not the case.

AMD is quite competitive right now, though I will admit Conroe looks to be rather nice, too. However, AMD has been at the top for a while now, so it's not that they are not competing.

Yes, they are litigating, and they are right to do so. As the article states, Japan found them responsible for illegal business practices, and we all know the reality of the Skype-Intel favoritism. So, it's not like this is just litigation for the sake of it... it's real, and I feel Intel should pay the penalty for "cheating".

Bottom line - get a better title. The facts speak for themselves.




RE: Misleading title
By PT2006 on 6/23/2006 11:42:32 AM , Rating: 3
AMD, Intel Serve Out More Subpoenas

Take off the fanboy goggles. No one is playing one sided here.


RE: Misleading title
By Xavian on 6/23/2006 3:20:10 PM , Rating: 2
"Why compete when you can litigate" the sub-title he was talking about. You may wanna take your own advice.


RE: Misleading title
By PT2006 on 6/23/2006 3:21:26 PM , Rating: 2
The original poster seems to think the subtitle only applies to AMD. I am pointing out that it seems to apply to both AMD and Intel.


RE: Misleading title
By BaronMatrix on 6/23/2006 3:43:20 PM , Rating: 2
Cyrix couldn't compete, Transmeta couldn't compete, NatSemi couldn't compete, NexGen couldn't compete. AMD had 15% of the World market when they filed this. Had the pressure fairy not visited the HPs and SuperMicros of the world, they would be closer to 30% now.

Dell is picking up AMD because Intel took away their sweet deal.


The real winners...
By Pythias on 6/23/2006 12:08:18 PM , Rating: 4
are the lawyers involved.




RE: The real winners...
By lobadobadingdong on 6/23/2006 12:35:48 PM , Rating: 2
Amen


RE: The real winners...
By clnee55 on 6/23/2006 1:16:49 PM , Rating: 2
No, I don't think any lawyers involved at all. The lawsuit and subpoenas were written by the poor engineers. They are willing to cut their salary to pay for all that.


slightly worrysome...
By plonk420 on 6/23/2006 6:26:16 PM , Rating: 2
the only thing that worries me about this is that AMD wasn't competitive, technology-wise during a good portion of the Athlon XP days... the very very early ones (pre Athlon XP) yes, the main portion of them, not really, in the field i was most interested in, video compression. if all you did was game, then more power to you, but video compression and some graphic design / NLE video editing / visual fx useage left a bit to be desired.

i'm a total AMD fanboy, tho, and i'm worried for AMD come Conroe, but it should make things interesting again in the consumer's market this summer...




RE: slightly worrysome...
By PrinceGaz on 6/23/2006 7:36:39 PM , Rating: 2
What? Are you at all familiar with the relative standings of the top AMD and Intel processors over the last ten years?

Up until mid-1999 when the Athlon was launched, Intel had always been the leader when it came to performance -- the K6 series from AMD were starting to match Intel's best in integer performance but fell badly behind with FP operations (unless the app supported 3D!Now extensions, which very few did). The K6-III in particular (thanks to its onboard L2 cache) offered very respectable performance in normal office applications, but overall Intel's Pentium III could outperform it clock for clock, so AMD could only compete by pricing their chips lower.

The launch of the Athlon (new K7 architecture) in mid-1999 changed everything. AMD now had a chip that could outperform an equivalently clocked Intel P-III, and both companies matched each other clock for clock so AMD were the performance leaders for the entire life of the Athlon, especially after Intel ran into problems with their 1.13GHz model. The year from mid '99 to mid 2000 was a hectic one but AMD led in performance all the way. After that their lead widened as the Athlon reached 1.4GHz.

Mid 2001 saw AMD's AthlonXP and Intel's Pentium 4 (Willamette core) go head to head, and again AMD were the clear winners both in performance and also price. It wasn't until mid 2002 when Intel released higher clocked Northwoods that they finally pulled ahead of AMD, meaning Intel had been behind AMD for three years both in performance and value (mid 1999 to mid 2002).

Intel only held the performance lead for a little over a year before AMD launched their Athlon 64 range in autumn 2003, once again putting them well ahead of Intel's best both in terms of performance and value. They've stayed ahead for the best part of three years again to where we are today, and only Intel's imminnent C2D will put them ahead for a while.

It remains to be seen how Intel will fare against AMD's K8L architecture due out next year, but the pattern is clear:

1999-2002: AMD lead Intel in performance and value
2002-2003: Intel lead AMD in performance, similar value (but AMD better value at lower end)
2003-2006: AMD lead Intel in performance, similar value

That doesn't look like AMD wasn't competitive to me, in fact it looks like they've been competitive for all of the last seven years, and the only reason to favour Intel in the whole of that period was for a fifteen or so month period from 2002-2003 when ever faster Northwoods left the AthlonXP far behind. Rather like the C2D is likely to do for the next year or so before AMD strike back with the K8L.

No, the only people who need to be worried are those at Intel who know their anti-competitive and bullying tactics are about to land them in serious trouble.


RE: slightly worrysome...
By plonk420 on 6/26/2006 3:10:32 AM , Rating: 2
you didn't RTFPost
quote:
the very very early ones (pre Athlon XP) yes, the main portion of them, not really, in the field i was most interested in, video compression . if all you did was game, then more power to you, but video compression and some graphic design / NLE video editing / visual fx useage left a bit to be desired.


quote:
Mid 2001 saw AMD's AthlonXP and Intel's Pentium 4 (Willamette core) go head to head, and again AMD were the clear winners both in performance and also price. It wasn't until mid 2002 when Intel released higher clocked Northwoods that they finally pulled ahead of AMD, meaning Intel had been behind AMD for three years both in performance and value (mid 1999 to mid 2002).


AMD was clear winners in what? gaming? "rated speed"? it surely wasn't video encoding. admittedly, it was a small interest for me then, but it was still an interest i made use of a LOT, and the Athlon XP's numbers (tom's, anand's) always made me frown.


monopoly?
By Cosmic_Horror on 6/24/2006 4:11:05 AM , Rating: 2
How much market share does intel have to have to be considered a monopoly?





RE: monopoly?
By Targon on 6/24/2006 9:31:26 AM , Rating: 2
There is no clear percentage that marks a company as being a monopoly, though generally anything over 65 percent means that company is a clear leader. The real issue is that ANY company that uses a threat of "product shipment delays" for using a competitor's product is generally in violation of certain rules of fair business practices.

In the case of Intel, there are two things that they have done that make them guilty of unfair business practices.

1) To provide rebates and discounts for intentionally not selling a competitor's products. Discounted prices for only selling Intel based products is acceptable, but beyond that, if Intel offers rebates for intentionally limiting sales of a competitor's parts, then they are in violation of fair business practices. This applies to distributors as well as retailers. It remains to be seen if Intel paid Best Buy in some way(rebates or money) to intentionally hide or not promote AMD based machines, which is an example of this.

2) To threaten a company with delayed shipments due to also selling AMD parts is considered to be an unfair business practice. Rewarding a company for being Intel-only is acceptable, for putting a penalty in place for not being Intel-only is not.


Intel could use their manufacturing capacity to lower prices, as long as the lower prices are still profitable. If Intel dropped their parts down to the point of losing money, just to drive AMD out of business, that would not be a fair business practice.

The big issue is that Intel has had a huge advantage for a long time, yet felt they had to use extortion tactics to keep AMD from gaining market share.




RE: monopoly?
By techhappy on 6/24/2006 5:03:14 PM , Rating: 1
We all know Intel is guilty of monopolistic practices, the evidence has been around for years. Some people might complain about AMD's subpoenas, but this sort of of response has been building for some time. Yeah, it seems babyish, but let's face it, a strong competitor against Intel only drives prices down for us consumers, and pushes competitive development forward. Anyone who worships Intel too much, needs to check themselves, do you really want only one cpu option for the next comp you build? How about lower prices and better cpu options? I think Intel deserves this wake up call and its about time the sleeping giant stops playing monopoly games and start putting out a better product. With Conroe and Kentsfield around the corner, it looks as if Intel is finally flexing the right muscles and starting to shine like they use to.


"There is a single light of science, and to brighten it anywhere is to brighten it everywhere." -- Isaac Asimov











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