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Competition Commissioner Neelie Kroes says Intel case may be larger threat to E.U. business than Microsoft

According to a report on Forbes, the E.U. Competition Commissioner Neelie Kroes, was asked to formally charge Intel on grounds of illegal business tactics. Kroes was asked by a number of European Union investigators that have been on the Intel case since 2000. At that time, AMD filed complaints about Intel that claimed Intel monopolized its business in several European regions by causing grief to system builders.

The original AMD reports claimed that Intel disallowed certain vendors to have their usual discounts if purchases of AMD products exceeded 20-percent of the vendor's overall purchase. DailyTech previously reported that Intel was in headlines for even bribing vendors not to carry AMD products. The original report by Financial Times Deutschland also noted that Intel carried out similar actions within the U.S.

Kroes is in the process of deciding whether or not to go through with a full charge on Intel. If not, the six year old case against Intel will be dropped. Until then, however, Kroes is requesting more information about Intel's activities in Europe. Kroes is proceeding cautiously, citing that the case with Intel could even be more complex than the Union's 10 year old antitrust case with Microsoft.

Early last year, Korean Fair Trade Commission raided the offices of Intel Korea. The KFTC deemed that Intel practiced unethical and illegal business practices that also involved a number of vendors. Intel representative Chuck Mulloy told reporters that Intel will fully cooperate with the investigation. "We believe the investigation is continuing. We will continue to cooperate," said Mulloy.


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not surprised
By Schrag4 on 1/17/2007 9:46:10 AM , Rating: 2
I've always felt that the business practice of vendors not selling to or providing discounts to a company if it does business with its competitor to be, 'questionable' at best. Of course Intel is not the only one that does this. The soft drink companies do it as well.

To me, this practice simply prevents the free market from doing what it does well. To avoid a flame war from AMD and Intel die-hards, let's look at soft drinks situation. If everyone and their dog preferred Pepsi, then no matter what what discount Coke offered, all the restaurants would go with Pepsi. If it was 60/40, however, with a big enough discount, Coke could persuade restaurants and other businesses to go with them. (I prefer Coke, personally)

If the practice was never done, businesses that sell soft drinks would simply look at what sells and buy the proportion from each vendor that's appropriate to meet the customers' needs. What a novel concept...

Besides, providing a 'discount' to you if you don't buy from my competition sure sounds like a bribe to me. Just my 2 cents though.




RE: not surprised
By Pythias on 1/17/07, Rating: -1
RE: not surprised
By masher2 (blog) on 1/17/2007 10:19:41 AM , Rating: 2
> "No businessman with a brain would consider their customer's interest ahead of their own.."

Rather more correct to say no business would consider their competitor's interests ahead of their own. That's why capitalism works so well...because the best way to make a buck is to give the customer what he wants, and do it better, faster, and cheaper than anyone else.


RE: not surprised
By Pythias on 1/17/07, Rating: -1
RE: not surprised
By masher2 (blog) on 1/17/2007 10:27:28 AM , Rating: 2
You articulated very well...I didn't mean to suggest otherwise.


RE: not surprised
By Schrag4 on 1/17/2007 10:29:35 AM , Rating: 4
I'm not talking about proving a bulk discount. Volume discounts are fine, buy why do you care if I'm buying from your competition? What I'm talking about is having your customers sign something saying they won't buy anything from your competitor in order to get a discount, regardless of what kind of volume they're buying from you. Again, that sounds like a bribe to me.

And who said anything about putting the customers' interests ahead of your own? Yes, you are trying to make money, that's why you're in business. But if you can't provide something that the customer values, you won't be in business for long.


RE: not surprised
By Pythias on 1/17/2007 10:41:20 AM , Rating: 2
These kinds of contracts are signed all the time, especially in the service industry, real-estate management for instance.

What about labor contracts? "I promise to work for you at the rate discussed for x amount of time, provided that you don't can me and hire someone else at a lower price"

Is that blackmail? Or a bribe?


RE: not surprised
By dagamer34 on 1/17/2007 10:30:18 AM , Rating: 2
There's a difference between having discounts and such, however, it becomes quite sahdy and should be illegal if you are now haggling based on how much an owner buys of a competitor's product. That's nothing short of blackmail right there, but at least a bait and switch in terms of prices. Because eventually you are locked out of buying your competitor's product and said company slowly increases prices. This is pretty much what Intel is doing and it's going to get them into some serious trouble.


RE: not surprised
By masher2 (blog) on 1/17/07, Rating: -1
RE: not surprised
By RobFDB on 1/17/2007 11:09:57 AM , Rating: 3
Correct me if I'm wrong but, are you trying to say that if Intel was really locking AMD out of the processor market, there are:

quote:
a dozen more are ready to step in to fill the void.

Do you honestly believe that? It might hold true in a market that has low barriers to entry, but in this market the barriers to entry are massive. Huge research costs, plus the cost of either building fabs or getting another company to make your chips, and that's just for starters.

The thing is AMD hasn't alledged that Intel has locked them out of the market, just that it's used it's market position to keep AMD's share of the market at a certain level. Big difference.


RE: not surprised
By masher2 (blog) on 1/17/07, Rating: -1
RE: not surprised
By Axbattler on 1/17/2007 11:48:03 AM , Rating: 2
Depends what you consider 'trouble'. I had trouble finding an AMD laptop in Taiwan a few years back. For desktops, it was a little better, with the reality is in between, but push come to shove, it was closer to 10x Intel only than 10x non Intel exclusive.

It's a little less one sided today, [i]perhaps[/i] with the Athlon's recognised success. But I am weary of the 'anyone on the planet' comment. How many countries have you checked?


RE: not surprised
By masher2 (blog) on 1/17/07, Rating: -1
RE: not surprised
By Motley on 1/17/2007 12:34:26 PM , Rating: 2
If you are trying to state something you believe is true, it's best not to exaggerate to the point that your statements are obviously false.

"anyone on the planet"? Obviously false. I can show you people who couldn't find their own nose, let alone an AMD processor.


RE: not surprised
By masher2 (blog) on 1/17/07, Rating: 0
RE: not surprised
By Motley on 1/17/2007 12:39:36 PM , Rating: 2
quote:
no consumer anywhere in the world has ever


I'd be willing to bet a bajillion dollars that's wrong.


RE: not surprised
By denka on 1/17/2007 1:21:34 PM , Rating: 3
quote:
early 2000..before AMD even HAD a mobile processor solution


I've seen a number of notebooks with K6-III. While this could have been not a specifically mobile solution (it could have been, I just don't bother to research), it worked quite well.


RE: not surprised
By Axbattler on 1/18/2007 2:45:33 AM , Rating: 3
The statement I am disputing is [...] "no consumer anywhere in the world has ever have difficulty finding an AMD processor for sale". You took it to a wider context there.

I'll discuss the topic in other threads - I do have more to say on this topic than pointing out a grossly exagerated statement.

But before that.

quote:
However, I know plenty of vendors that ship worldwide.

Having to purchase from outside the country is not what I classify 'without difficulty'. I've searched in large computer fair and major computer component 'markets' (online shopping for was not prevalent in Taiwan back then - I am not sure if that has changed).


RE: not surprised
By masher2 (blog) on 1/18/07, Rating: -1
RE: not surprised
By Axbattler on 1/18/2007 12:40:16 PM , Rating: 2
And I am speaking for 2000. And I re-iterate, since you seem to have missed. You are the one who brough the "anywhere in the world" (not to mention "ever") into this topic.


RE: not surprised
By masher2 (blog) on 1/18/07, Rating: 0
RE: not surprised
By Axbattler on 1/18/2007 9:09:44 PM , Rating: 2
Unless grocery stores typically stock floors of PCs and PC components, I am quite sure I did not mistake the aforementioned computer fairs/markets for a grocery store.

What you 'believe' to be logical is no substitute for fact. I went there with the very same expectation. If I was able to find AMD laptops in the UK, then surely it meant that I could find them but cheaper in Taiwan right? Logical perhaps, but it did not work out that way.


RE: not surprised
By masher2 (blog) on 1/18/2007 9:34:02 PM , Rating: 2
> "If I was able to find AMD laptops in the UK, then surely it meant that I could find them but cheaper in Taiwan right? "

Ahh...you're talking about laptops. No wonder. What fool company would have built an AMD-based laptop in the year 2000? I'm sorry, but you just totally invalidated your own point. Sempron was years away, and Duron hadn't been out long enough to design a machine around. AMD didn't have anything even close to competitive at the time. A very few firms built AMD laptops based on their desktop chips...but you'd have been an even bigger fool to buy one.


RE: not surprised
By RobFDB on 1/17/2007 12:06:35 PM , Rating: 4
Ok I think I mis-interpreted what you said. I assumed you were saying if Intel locked AMD out of the market other chip makers could step in and supply the market. I think you actually meant that if one vendor didn't take AMD chips then 10 others would be ready to step in and buy those chips. It's a nice idea, but when one of the people not buying your chips is Dell it becomes a bit of a problem.

quote:
You have to remember that antitrust law exists to protect consumers, not competitors.

That simply isn't true. Anti-trust laws are designed to protect both consumers and businesses from anti-competitive behaviour. Vendors may have been offering Intel PC's at a lower cost, but that's all you could buy. There was no choice* , and that's a massive problem. A company abusing it's position as far away market leader by restricting consumer choice is neither good for the market, or good for the consumer.

* When I say no choice I'm referring to the big Tier 1's and not the smaller vendors that make up the market.


RE: not surprised
By masher2 (blog) on 1/17/07, Rating: -1
RE: not surprised
By RobFDB on 1/17/2007 12:55:54 PM , Rating: 4
I have no problem with legitimate competition. This is what Core 2 Duo is. Intel competing in the market place the way it should, with a superior product. Before this however Intel had slower, hotter, more expensive chips than AMD but still couldn't grow it's market share. It's alleged that Intel did this by either offering cash incentives to vendors to not take AMD chips or threatened to not supply vendors if they did. We're not talking about the market now, we're talking about it years ago.

This sort of action hurts consumers because it limits choice. It hurt AMD too. It was the case that none of the Tier ones had an AMD based line, however consumer demand reached such a level that eventually it made more sense for the big vendors to start selling AMD based PC's. Of course Intel did this while it developed the C2D CPU, which would allow them to compete with AMD legitimately.

I don't think it's any coincidence that Dell started selling AMD based PC's and portables once Intel had a product that easily competed with AMDs offerings. They didn't have to worry about consumers picking the better chip because they now had it.

Yes Intel developed the C2D because of AMDs excellent Athlon range, and you might not be wrong when you say without AMD Intel wouldn't have had any incentive to improve their chips, but I would wager C2D would've come along anyway due to market pressures - reduced thermal footprint, better performance per watt etc. However you're assertion that if AMD and Intel reached some kind of parity competition would drop off is terribly pessimistic.

Free market businesses by the nature of the free market are always trying to grow their market share. If AMD and Intel hypothetically had a 50/50 split one of two things could happen. They could either agree to fix the prices of their chips at a certain level and that would definatly hurt progress, or they would continue to innovate and develop better and better chips. I would argue that market share parity would actually benefit consumer choice because one chip vendor could no longer try and coerce vendors into only using their chips. I would wager this would encourage fierce competition between AMD and Intel.

Apologies for the massive post. Hopefully it flows.


RE: not surprised
By bldckstark on 1/17/2007 1:00:18 PM , Rating: 3
I don't care to argue all of the points in your statements above - but the far and away leader of the AMD argument is that they HAD a better desktop chip (not anymore) for around 5 years (check local listings), and Intel chips cost more. In that period of time AMD's market share remained roughly the same. In a free market this probably would not happen.

Yes, I am aware of all the arguments attempting to show why Intel would not lose market share to AMD under these circumstances, but the arguments made in the AMD legal filings are pretty convincing. You may commence to quote and slash my post now, I just thought everyone else who was reading this would like to understand the case a little better.


RE: not surprised
By masher2 (blog) on 1/17/07, Rating: 0
RE: not surprised
By theapparition on 1/17/2007 4:25:09 PM , Rating: 2
I was going to reply to the original post, then I saw your comments. I believe your points were summed up nicely, and better than I could have.

How short of memory does everyone seem to have? Only at the end (prescott) did the intel chips become massively outperformed for certain applications like gaming and rendering. If anyone wants to check the old benchmarks, I still think the last iteration of P4 beat the best Athlon in a few benchmarks. Anyone remember the days of the Athlon with the fried egg made on it. No thermal diode, chips melting? How quick the tables turn. Next intel had the heat problems, now its back to AMD.

I'm going to go out on the limb here......but I bet AMD's next chip will be pretty good. We may even see the tables turn again. But then there's intel with 45nm, and the tables turn again.........get the picture.

Masher2 is completely correct, I defy anyone to find a more healthy competitive industry.

I can argue that GM is producing vehicules that are superior to Toyota. In fact, GM swept car and truck of the year awards. Toyota is gaining marketshare, GM is losing. Does that mean that Toyota is acting illegally to gain marketshare? Any reaonsable person will be able to answer this question themselves. So the weight of branding is incredibly important. Look at the "I love Sony"/"I hate Sony" loyalties on dailytech. I must say that intel did a masterful job of selling their brand.

In 5 years from now, hopefully, we'll still be debating who has the better chip.


RE: not surprised
By piesquared on 1/17/2007 10:35:47 PM , Rating: 2
Well, imagine what the market would have looked like if Intel hadn't supressed AMD's expansion before K8 arrived. If AMD had even a small toe-hold in the OEM market prior, think of the inroads they would have had immediate access to with K8. There's no reason K8 should not have been an immediate success, like C2D. How long did it take for AMD to penetrate the OEM market after it's release? There is overwhelming evidence that Intel's anti-competive nature hurt AMD's bottom line, and ultimately it's growth.


RE: not surprised
By masher2 (blog) on 1/17/2007 10:50:37 PM , Rating: 1
> "There's no reason K8 should not have been an immediate success..."

If you truly believe this, you'll continually be confused by the corporate market. An enthusiast may be (sometimes) willing to take a chance on a new, untested brand. But large companies move slowly...and the market has a lot of inertia. K8 was, by corporate standards, nearly an overnight success.

> "There is overwhelming evidence that Intel's anti-competive nature hurt AMD's bottom line..."

But no evidence that Intel hurt the consumer. Quite the opposite in fact. Companies are supposed to hurt their competitors. If they didn't, we have the same stagnant economies that all socialist nations do.


RE: not surprised
By Axbattler on 1/18/2007 10:11:44 PM , Rating: 2
quote:
Companies are supposed to hurt their competitors. If they didn't, we have the same stagnant economies that all socialist nations do.


You seem to equate companies 'hurting' each other as being automatically beneficial to the consumers. Well, Creative was very successful in 'hurting' Aureal. Did consumers really benefit from their departure? Aureal was driven out of the market not by the consumers choice. I can see companies 'hurting' each other by providing the more desirable products, as deemed by the consumers, as beneficial to the consumers. I can accept the realities as being more complicated than that, but that's another reason why I do not think 'hurt' automatically implies healthy competition.

I am not asking a cartel, but I want to see a 'clean fight'. Clean being, subjective as always.


RE: not surprised
By masher2 (blog) on 1/18/07, Rating: 0
RE: not surprised
By Schrag4 on 1/17/2007 2:22:05 PM , Rating: 2
"Pass a few laws and let AMD win a few court cases to take Intel off its back-- then you'll see how fast progress can slow down. Do you really want that?"

You're right, if either Intel or AMD fell way behind, progress would slow. But does that mean you look the other way when unethical behavior is used by one company in order to keep up with the other?

I'm not saying that the practice of giving 'discounts' to customers if they agree not to buy from your competition is unethical, that's what the question at hand. I don't know what the right answer is, but it feels unethical.

Your argument that the discount means lower prices for the end consumer doesn't resonate with me either. The questionable practice we're talking about is, arguably, anti-competitive, don't you think? Since when does less competition mean better value for the consumer?

Look at it this way. In scenario A, Intel offers a discount to Dell if they only sell Intel processors. Dell can pass those savings on to the consumer. Consumer gets lower priced Intel CPUs. Great! Scenario B: Had that practice been considered illegal, Dell might sell both processors (which I know they do now, but this is hypothetical), and neither companies provide a discount to Dell. However, they're COMPETING with each other so they have to provide their processors at lower prices to Dell. Where am I wrong here? Please don't hate me I'm just confused and trying to figure this out!!!


RE: not surprised
By masher2 (blog) on 1/17/07, Rating: 0
RE: not surprised
By RobFDB on 1/17/2007 4:26:26 PM , Rating: 2
And what if the 100 suppliers carrying Intel make up 75% of the total market? What if the 100 carrying AMD are smaller than the big 100 and therefore don't benefit from as great economies of scale and therefore their computers cost more? How does your scenario benefit the customer then? Simply it doesn't. Your hypothesis supposes that each the total supply and cost from each 100 suppliers is equal when that clearly won't be the case.

As I've said, when the big boys don't carry your CPU your forced to go to smaller companies that have a smaller market share. This means you can't sell as many CPU's that you'd like to. This means you can't grow your market share. Work it out!!! How can you say this is good for the consumer!!


RE: not surprised
By masher2 (blog) on 1/17/2007 4:36:47 PM , Rating: 1
> "And what if the 100 suppliers carrying Intel make up 75% of the total market? "

Actually, before AMD had its first CPU, those suppliers carring Intel made up 100% of the market. So how did AMD get a foothold? By doing what any competitor must do...offering either a better product, a lower price, or a combination of both.

If you truly do have a better product or a lower price, then suppliers WILL carry your product. Period. Or else new suppliers will spring up, and put those old ones out of business.

AMD has gained large amounts of market share, in one of the most competitive markets in the world. The cut-throat competition has benefitted us all. Government intervention is going to break something thats already working well. Leave the market alone.


RE: not surprised
By Ringold on 1/17/2007 6:58:58 PM , Rating: 1
"Government intervention is going to break something thats already working well. Leave the market alone. "

Agreed. I think Intel is 'playing rough', so to speak, and that seems to offend peoples sensibilities, but that is simply how the world works when you dig below of the surface of likely any industry.

The question is two fold. Did Intel do anything illegal or anti-competitive in the sense of invoking anti-trust laws, and even if it did, is it worth enforcing at the risk of damaging the market and distracting AMD and Intel both from their job (producing products)? I believe the answer to both is no, and this is just the EU blowing its typical hot air.

They probably ran out of hand-outs from EU members and burned through the money from Microsoft fines and need some more income. Stick a bunch of ticker symbols of high-market share (preferably American) companies on the wall, throw a dart. Hello, Intel. Little more logic seems involved than that.


RE: not surprised
By Axbattler on 1/18/2007 3:00:23 AM , Rating: 2
quote:
The phrase "protection the competition not the competitor" is one of the primary credos of antitrust law. Companies are supposed to harm each other.


Antitrust law most likely differs from country to country.
As for the harm each other comment, I am going to sensibly assume 'within the confinement of the law'. Which, as previously noted, may vary from between countries and even situations. And that's only from a legal perspective.

Looking from a non-legal perspective (I am sure Intel/AMD's lawyers have a much better picture from that perspective), I question whether this practice is 'healthy' in this specific scenario. In cases where two or more companies have comparable strength, trying to tie their vendors down (vendor lock-in) is probably not going to cause too much harm. It's 'fair' since they all have a reasonable opportunity to succeed, so it comes down to the ones with the best negotiators.

In this case however, Intel has so much more leverage. It's a strategy that only it can employ (realistically). So Intel is just making the most out of it's competitive advantage, right? Perhaps, but it is also a strategy designed to lock the competition out. When successful, the competitor's margin is going to diminish. Squeeze a little and the company will (try to) innovate to survive. The consumer benefits. Squeeze too much or too long, and the company will either move into greener pasture, or go out of business since it has no more mean to compete. Now I do not think AMD is going to go out of business soon, but I find that scenario is far worst than the one's you've described. This is -not- like, say, the MP3 market where although there is a clear market leader, the barrier to entry is low enough that if a player goes out (say Rio), you have several other known competitors (and many other unknown) keeping Apple on it's toe.

And it's not like AMD can take it easy with this obstruction out of the way. Most enthusiast will still pick whatever offers the best performance for their budget. And more importantly, Intel is still the more established brand so AMD is still going to have to offer added value in some form or another to lure more average users to try their products. The chances that AMD is going to suddenly become a 'bloated' company shall it win a few cases? About as high as AMD going out of business. Very low in the short term. But the former is the lesser of two bad scenario.


RE: not surprised
By masher2 (blog) on 1/18/07, Rating: 0
RE: not surprised
By Viditor on 1/17/2007 11:45:45 PM , Rating: 3
quote:
Intel kept AMD's market share low by offering steep discounts to vendors. That allowed those vendors to sell Intel products cheaper to their customers


That's only half of the story...they offered steep discounts to vendors BASED ON SALES. This is exclusionary and created a false barrier to entry through the use of marketing power.
In other words, Intel would base their discounts (retroactively) on how many systems were sold, then give big discounts to those that sold all Intel only. This forced those who sold AMD to buy Intel chips at a much higher price than their competition.
For those companies, the choice (because of competition) became either selling all AMD or selling all Intel...it was financially unviable to do both. Since Intel had over 80% marketshare and AMD could not guarantee enough supply to subsidize that many chips, it was strictly an exclusionary tactic.

This very much hurts the consumer in that it creates a false market which is controlled by Intel.
While it's true that the large OEMs received a discount, I submit that the discount would have been much greater if free trade were actually occuring...in fact today's pricing should be ample proof of that very point!


RE: not surprised
By slunkius on 1/18/2007 5:35:52 AM , Rating: 3
quote:
Of course, because its true


ahhh, the great masher2, where would we be without YOUR truth...


RE: not surprised
By masher2 (blog) on 1/18/2007 9:59:48 AM , Rating: 1
> "ahhh, the great masher2, where would we be without YOUR truth... "

If you can't attack the message, attack the messenger eh? I commend you on your tactical maneuvering.


RE: not surprised
By Viditor on 1/17/2007 11:34:53 PM , Rating: 3
quote:
It's simply utilizing a vertical market arrangement...a standard business practice for over a century


Though of course not in areas where there is a high barrier to entry...like this one.
quote:
despite this arrangement, no consumer anywhere in the world has ever have difficulty finding an AMD processor for sale

Most consumers don't buy a processor, they buy a system.
By limiting consumers access to systems with AMD, Intel created another barrier to entry using it's marketing power. This is not legal.
quote:
If a vertical arrangement locks out one source, a dozen more are ready to step in to fill the void

Not true...as most consumers and businesses find it necessary to choose OEMs for their suppliers (due to replacement speed, warranty, etc...), the number of sources with the capital to fulfill those needs is strictly limited.


RE: not surprised
By Zurtex on 1/17/2007 10:35:30 AM , Rating: 2
And that's fine, but that's not the issue here.

Providing discount to people who buy in bulk is what economy of scale is about. It is not about providing a discount to people buy in bulk and don't buy in bulk off someone else, or not providing a discount to people who buy in bulk because they are buying in bulk from someone else.


RE: not surprised
By RobFDB on 1/17/2007 11:02:18 AM , Rating: 2
Yes but this goes much further than simply giving a discount to people who buy more from you. It's alleged that Intel provides financial incentives to companies to not buy AMD processors, or threatens to dial down supply to a vendor if they buy too much AMD stock. This isn't companies exploiting economies of scale, it's a company abusing its position as market leader who holds a much, much, much bigger percentage of the market than their nearest competitor.

That's abuse of the free market. Allegedly.


RE: not surprised
By cochy on 1/17/2007 12:37:52 PM , Rating: 2
These two last posts hit on the issue very well. Intel has been known to border line extort system builders for years. After all they have gone under the name Darth Vader for a reason. Intel is using their market power to stifle competition not by under cutting the competition but by decreeing, if you will, how much of a competitors product a customer can buy. Some of you have mentioned this is the free market, well I'm sorry but this is nothing of the sort. The market is free when consumer and business get to decide on their own what product to purchase. Intel is essentially manipulating the market, fighting against the forces of the free market. They are being careful not to be accused of monopolistic practices (which they are dangerously close to doing) by saying that you can not buy more than 20% AMD. What if they said you couldn't buy any AMD at all? Now they are an illegal monopoly however they haven't changed their business practice one bit just one number.

Imagine what would go down if Microsoft told system builders how many installations of Linux they were allowed to sell in comparison to Windows. Ya right that would go down beautifully. Same scenario.


RE: not surprised
By Micronite on 1/17/2007 2:18:25 PM , Rating: 2
Part of what makes a free market a free market is the checks and balances that regulate monopolistic practices.

Clearly Intel doesn't want competition to increase marketshare. That would mean Intel loses marketshare... they don't sell as many processors/chipsets/etc... they don't make as much money as they could.

The problem is that it is ethically wrong (and in some instances illegal) to coerce an independent customer's business.
The best way to increase marketshare is to lower prices. The trick is to find the balance between cost and volume that nets your best return.
When you forcefully increase your volume without having to modify your cost, you've generally engaged in shady business practices.
The same is true for increasing cost without changing volume (look to the DRAM industry a few years back for proof of this).


EU are socialist
By clnee55 on 1/17/2007 5:27:43 PM , Rating: 2
EU countries are mostly socialist, especially France. They are very allergic to free market of capitalism. NO surprise.




RE: EU are socialist
By cocoman on 1/18/2007 2:10:44 PM , Rating: 2
Actually, becuase there is free market in the EU, much more than in the US with the rest of America (Mexico, Canada,etc.. for those that do not know that America is a continent, not a country) they try to prevent this situation. In a free market no one is coming to tell you what you can sell and what you can´t, or how much you can sell. That is free market! Markets where one huge company can tell sellers what to sell is more like a planed market, tipicall of communist countrys, just that in this case is the companys not goverments that plan the economy.


RE: EU are socialist
By masher2 (blog) on 1/18/2007 2:23:32 PM , Rating: 2
> "Actually, becuase there is free market in the EU, much more than in the US with the rest of America "

I can't believe people type this stuff...whatever happened to our educational system? Sir, there is far more to the definition of a "free market" than free movement of goods across national boundaries. In fact, free movement has almost nothing to do with it.

A free market is one in which supply, demand, prices, costs (including labor costs) are set by market forces, not by government action. Almost HALF of the entire EU budget is devoted to the CAP, a policy of subsiziding agricultural products across the union. I won't even get into the tens of thousands of other subsidies, cost supports, wage tiers, and other factors that make the EU marketplace anything but "free".


RE: EU are socialist
By cocoman on 1/19/2007 8:42:48 AM , Rating: 2
Don´t be naive!! You think the US does not use subsidies like the rest of the world??? And specially with agricultural products!! Ever heard of Cotton and Africa? In case you haven´t, Africa produces the cheapest Cotton and one of the best, but the US has such a HUGE subsidie, that the price of Cotton in the US is below its cost. Ever heard of Shrimp and America, or maybe Tuna Fish, Oranges etc?
Of course the US has a free market, but only within the US. Not with other countrys, but maybe Canada and Mexico.
Supply, demand, prices, and costs set by market forces are highly influenced by import tariffs. Why do you think everything selled does not come from China?? Free movement of goods across the EU is basic for a free market. It is imposible to have a free market without it, and probably it is the most important aspect of a free market.
But you are right. Your educational system is not good enough.


RE: EU are socialist
By masher2 (blog) on 1/19/2007 9:45:05 AM , Rating: 1
> "You think the US does not use subsidies like the rest of the world??? "

Did I ever say otherwise? No nation anywhere has a totally free market. However, anyone who believes the level of subsidies and price supports in the US comes close to that of the EU, is sadly deluded. The US spends $16B/year on agricultural subsidies; the EU spends €43B on CAP subsidies alone... PLUS even more from individual member nations.

> "Your educational system is not good enough..."

This coming from a person who believes the EU is a free market? A "single market" is not a "free market". A free market implies a lack of government intervention in the economy. No crushing taxation, no social welfare programs, no bureaucratic regulation, no antitrust legislation, no minimum wages or minimum work weeks, no subsidies, no price supports, no nationalized industries, no import or export quotas.

Does this sound like the European Union I'm describing? And you attack the US educational system? Truth is stranger than fiction.


RE: EU are socialist
By cocoman on 1/19/2007 10:47:11 AM , Rating: 2
"A free market implies a lack of government intervention in the economy. No crushing taxation, no social welfare programs, no bureaucratic regulation, no antitrust legislation, no minimum wages or minimum work weeks, no subsidies, no price supports, no nationalized industries, no import or export quotas."

Of course the US doesn´t have any of this...


RE: EU are socialist
By masher2 (blog) on 1/19/2007 11:18:15 AM , Rating: 1
> "Of course the US doesn´t have any of this..."

And I never said it did. I was simply correcting your original statement which, since you seem to have forgotten it, I will repeat:
quote:
becuase there is free market in the EU, much more than in the US...
As I've already stated, no nation in the world has a wholly free market. The US, however, is substantially closer to one than is the EU. You were wrong; time to move on.


RE: EU are socialist
By cocoman on 1/19/2007 1:23:28 PM , Rating: 2
First. You can´t compare the EU only to the US. You are manipulating what i wrote. Read again, you cut off the last part. If you want to compare something it has to be EU with North America or NAFTA. Which means your point that the US has more of a free market that the EU is ridiculous. Of course it will have more of a free market than the EU. The US is one country, The EU are 27 countrys. I think you have gotten it all wrong all this time. Comparing apples to apples, The EU has more of a free market by far, compared to North America of NAFTA, or even all of America.


RE: EU are socialist
By masher2 (blog) on 1/19/2007 1:47:10 PM , Rating: 1
> "You can´t compare the EU only to the US..."

Lol, this is the person who, just a few posts ago, wrote "there is free market in the EU, much more than in the US"? What is that if not a comparison? Does the word hypocrisy mean nothing to you?

> "Of course the US will have more of a free market than the EU. The US is one country, The EU are 27 countrys"

So now you write the exact opposite of your original statement? An interesting debating tactic. In any case, if you compare the US to nearly any member nation of the EU, you'll find the same thing is true. The US has fewer governmental controls on markets. They are more free...which explains why it takes all 27 nations of the EU (totalling 50% more people) to equal to productivity and GDP of the US alone. Free markets work. Government intervention does not.


RE: EU are socialist
By cocoman on 1/19/2007 1:56:11 PM , Rating: 2
Learn to read and quote.
"there is free market in the EU, much more than in the US with the rest of America." Then learn to debate.


RE: EU are socialist
By cocoman on 1/19/2007 2:48:06 PM , Rating: 2
"Free markets work. Government intervention does not."
Norway, almost a 100th the population of the US has almost double the US GDP per capita. It is a socialist country (not like in the cold war, socialist), like most European countrys. The difference is that they are capitalist countrys with socialism. Government intervention does work if it is done properly. Just take a look at China and how extremely fast it grows with government intervention.


RE: EU are socialist
By masher2 (blog) on 1/19/2007 3:41:32 PM , Rating: 1
> "Norway, almost a 100th the population of the US has almost double the US GDP per capita"

Oops...actually, its abot 50% higher. And why is it so? Because Norway is incredibly well endowed in gas and oil. Those two items alone make up half the nation's exports by themselves. When you're rich enough in resources, you can manage them poorly and still do well.

I'd also like to point out that Norway has been rapidly engaging in privatization during the last decade....the government has sold off all or part of its state-owned petroleum, telecom, and other businesses. Since that program started, the nation has seen vast economic growth, which propelled it to the per-capita GDP to which you allude.

Norway makes my point for me. The less government intervention in the economy, the healthier it will be.


RE: EU are socialist
By masher2 (blog) on 1/19/2007 3:43:59 PM , Rating: 1
> "Just take a look at China and how extremely fast it grows with government intervention. "

Umm, China had a microscopic, wholly stagnant economy for decades . It didn't start to grow until the government began abandoning some of its statist, socialist principles, and allowing a small degree of market freedom. Then, overnight, the economy began to blossom.

More proof. Free markets work. Government intervention does not.


By therealnickdanger on 1/17/2007 9:29:54 AM , Rating: 1
The EU suing any company for anti-trust violations is like the pot calling the kettle black.




By Zurtex on 1/17/2007 10:43:51 AM , Rating: 3
Well, without being too pedantic about what they are actually doing...

I think you're over simplifying the situation, and you're confusing the difference between the EU legal bodies and the EU policy makers (though I've done some serious study in to the EU on my course and I make that mistake all the time lol).

I'm rather impressed the EUs will power and pursuit of these kind of issues. They're bad for consumers and therefore bad for the economy, but they're very hard to stop and most governmental bodies in most countries just don't have the effort to follow it up properly.


By masher2 (blog) on 1/17/2007 11:32:43 AM , Rating: 3
> "They're bad for consumers..."

On the contrary, these arrangements are good for the consumer. Intel paid vast sums to vendors, effectively subsidizing the cost of buying their products. That allowed those vendors to sell those products more cheaply. And that, in turn, forced AMD to lower prices at its own vendors.

During the period in question, CPU prices plummeted at a dizzying pace, even as CPU power increased dramatically. Had Intel been less cut-throat in its marketing, it certainly would have helped AMD. But it would have hurt the consumer. Cut-throat competition is the best thing for buyers. May it never end.


ERm
By Nik00117 on 1/17/2007 12:38:34 PM , Rating: 2
When Intel had the pentium 4 out and it was everywhere well the AMD Anthlon 64 was crushing it and more P4s sold then AMDs that was bad, because intel was pushing a bad product.

Now with the new Core Duos they can push it in my mind as much as they want. I think AMD is trying to catch up to intel, they were so used to being able of Intel among the euthuists and now they are behind. So they are tossing lawsuits at them.

Frankly its a free market, a free market doesn't=a fiar market. If intel can afford to offer discounts to encourage vendors to go with them they hey all the better. I'm sure AMD would do the same.

Frankly I think this lawsuit is BS.




RE: ERm
By afkrotch on 1/18/2007 12:28:51 AM , Rating: 2
Well, most ppl have never even heard of AMD and even then, Intel chips were inexpensive during the Prescott years. A cheap dual core Pentium D could be had for under $100 and the only dual core available from AMD was over $300.

You also have the mhz myth, so ppl would rather buy a 2.6 ghz proc, than a 2 ghz proc.

Intel also has the ability to mass product procs for a low price, while AMD only has like...3 fabs at which procs can be made. Intel can easily drop prices without getting hurt, while AMD simply can't do such.

Is this unfair? I personally don't think so. If I can make 20 gallons of lemonade and my next door neighbor can only make 2, then I can be on the street selling my lemonade for less. End result, I'll have more business.


This is VERY interesting
By samuraiBX on 1/17/2007 8:53:29 AM , Rating: 2
Wow... if the US suit that AMD filed is still in litigation when the EU makes a decision on this (and it's not looking good), Intel could actually be in some trouble...




this is rediculace!!!!!!
By Grast on 1/17/2007 11:00:28 AM , Rating: 2
This issue with Intel is only going to hurt one population. The EU citizen which use Intel produces. Intel's business practice are not illegal or morally wrong.

Anyone who disagrees needs to go take a economics class and learn how the free market really works. Better yet, go talk to a realy business owner and get their view on the subject.




The EU's new source of revenue
By thejez on 1/17/2007 11:55:08 AM , Rating: 2
So this is how the EU is going to fund its operations now? by stealing $$ from successful global companies via false charges and mythical illegalities? If I were MS and Intel id do what sony did and make all the Europeans wait an extra 6-12 months on everything I sold (and ban it for that duration as well and sue companies that sell to them like sony is doing) until the get rid of the morons running the EU.... on top of that they should charge the Europeans more because of the increased cost of doing business there now with all their anti-capatilistic policy....

I think this might be the ONE thing sony is doing right... sticking it to the EU consumers whose legislature is passing laws "for their benefit" (ROFLMAO)....





Such nonsense.
By Khato on 1/17/2007 12:05:57 PM , Rating: 2
What does the market leader get? All kinds of lawsuits from the 'competitors' trying to get money through 'damages' of one sort or another since they can't get enough profit from selling their products.

What's the actual cause of the anti-trust suits the A company has brought against Intel? It's them throwing a hissy fit because they don't have the money to give to manufacturers to advertise their products. Yes, all these alledged 'bribes' are simply advertising grants. The majority of Intel's sales are through OEM computers, not directly to end users, so how better to spend advertising dollars than on what actually gets -sold-. And in that context, it makes perfect sense that these advertising grants would be pulled if a manufacturer had more AMD machines for sale - the customer might not pay attention to the processor at time of order, so then Intel advertising dollars would go to an AMD sale.




sorry dont trust eu
By whalenapp81 on 1/17/07, Rating: 0
Overclocking
By jackalsmith on 1/17/07, Rating: -1
By masher2 (blog) on 1/17/2007 9:28:06 AM , Rating: 2
> The fines however need to be in the Billions - that's with a "B"...."

Yep, because fining American businesses is a more politically safe method of raising money than taxing European consumers.


By Zurtex on 1/17/2007 10:38:23 AM , Rating: 4
Well, it's more popular in Europe :D

But seriously, this is Europe trying to solve a dispute between the operations of 2 American companies in Europe. And it's a pretty reasonable accusation given how Intel operate.


By THEREALJMAN73 on 1/18/2007 2:02:06 PM , Rating: 2
quote:
Yep, because fining American businesses is a more politically safe method of raising money than taxing European consumers.


I agree it seems the E.U. is looking to fund itself more than finding legitement problems.


By Grast on 1/17/2007 10:57:15 AM , Rating: 2
Beenthere,

If is is widely known, then why do these Asian motherboard makers still produce Intel chipset boards? The reason is simple. Your accusation is just hearsay and does not mean anything.

Intel practices of offering lower prices to vendors which only sell their product or more correctly request vendor to sell less than 20% of their competitors product is completely legal and acceptable practice.

As stated in a previous post, many other companies have the same policies. The next time you go into a grocery mart; please have a look around. The product you see in that store all have the same type of contract associated to them. Kraft for instance will give greater price breaks for only carring their product line. Philip Morris will sign give discounts to vendors for not selling competitors. The soda makers will give discounts for keep generic soda options below a certian percentage.

The practice Intel is using is not criminal!!!! It is part of the free market process.


By masher2 (blog) on 1/17/2007 11:28:59 AM , Rating: 3
> "You are very wrong. It is completely illegal..."

I'm sorry, but this isn't correct. Exclusionary vertical market arrangements are legal in general. Antitrust law rears its head if a) the holder has a monopoly position and b) the arrangement allows the holder to gain market share it otherwise would not have had.

Does Intel hold monopoly power? I'd dispute that, as, despite its large market share, it does not have the ability to dictate market pricing. If AMD cuts prices, Intel must follow suit, and vice versa.

Did these arrangements allow Intel to hold market share it otherwise would not have had? I dispute that even more strongly. Any consumer wanting AMD products had countless sources to obtain them. An additional vendor or two would have simply cannabilized sales from existing sources; it wouldn't have increased AMD's market share.

Once again, remember this-- antitrust law exists to protect consumers. Not competitors. Intel spent vast amounts of money to get their products to consumers cheaper. That lowered pricing for Intel products which is a good thing for the market.


By cochy on 1/17/2007 1:10:22 PM , Rating: 3
Well masher you better get out your hat and start disputing a great many things because this situation is not as black and white as you make it out to be.

Points:

quote:
Exclusionary vertical market arrangements are legal in general


Not true

See:
quote:
When the sales outlets are owned by the supplier, exclusive dealing is because of vertical integration, where the outlets are independent exclusive dealing is illegal due to the Restrictive Trade Practices Act, however, if it is registered and approved it is allowed.


http://en.wikipedia.org/wiki/Exclusive_dealing

Are these "deals" Intel has been making approved? Start doing some research, I do not know.

quote:
At the same time, courts condemned as "unlawful exclusion" tying contracts, exclusive dealing, and other agreements that disadvantaged rivals.


quote:
For several decades courts drew the line between efficient and inefficient exclusion by asking whether the conduct under scrutiny was "competition on the merits." Courts equated such competition on the merits with unilateral conduct such as product improvement, the realization of economies of scale, innovation, and the like.


Intel doesn't have much merit here by forcefully telling systems builders how much AMD to buy.

However more recently the law has been defined as:

quote:
For instance, non-standard contracts that exclude rivals are now lawful if supported by a "valid business reason"


What is Intel's reason? It can't be anything more than "we do not want AMD crossing a certain market share". Is that a legal reason?

from: http://en.wikipedia.org/wiki/Monopolization

Well from the looks of things Intel's business practices are certainly shady. This as I've mentioned above has been known for a while. However, I am not sure that they continue with these practices in the US, as if they did, it would stand to reason that there would be legal action against them based on these practices. I am not aware of any litigation against Intel in the US, could someone in the know please inform?

On the other hand according to this article, Intel has been practicing this tactics in Europe, and we all know Europe has much harsher laws than America in this respect.

Someone mentioned something about grocery markets exclusively selling Kraft over some other cheese. Well I don't know about grocery stores in the US, as I am in Canada, however this is not the case. The most a company can bargain with a grocery store is where on the shelf their products get displayed not that they be the only brand of cheese sold. Places like MacDonald's are allowed to sign exclusivity agreements with Coke, because Coke has a valid reasons for doing so, not the least of which, is that Pepsi owns many fast food chains and is allowed to exclusively offer their product in them.

I guess we could go on forever, the point is that this is certainly not a black and white issue.


By masher2 (blog) on 1/17/2007 1:53:49 PM , Rating: 1
> "Not true See: ...http://en.wikipedia.org/wiki/Exclusive_dealing<...

Ah the dangers of using Wikipedia as a source. The "Restrictive Trade Practices Act" is not US case law. Australia has a "Fair Practice Act", and several other nations have similarly-titled legislation. The Wiki article lists no sources, so its impossible to verify. Furthermore, the article you cite deals with distributor arrangements, not system integrators, a wholly different market.

Rest assured that in the US exclusive dealing is legal, given the caveats I already mentioned. Is it legal in the EU? That's a harder question to answer, especially since EU antitrust law tends to bend much more to public opinion and political expendiency. The simple truth is that, regardless how the current law is written, if the EU wants to penalize Intel, they'll find a way to do so.

> "Intel doesn't have much merit here by forcefully telling systems builders how much AMD to buy..."

When Intel is giving system builders advertising dollars, they certainly do. Does it make sense for Intel to pay Dell to advertise AMD systems?



By masher2 (blog) on 1/17/2007 1:54:41 PM , Rating: 2
closing italics...


By cochy on 1/17/2007 2:15:09 PM , Rating: 3
The 2nd wikipedia article listed US cases (United States v. United Shoe Machinery Co. & Eastman Kodak v. Image Technical Services, 504 U.S. 451 (1992)) The 1st article I quoted was to make the point that vertical integration is not valid here. However yes those articles did lack citations.

In any event you keep blurring the issue. When you mention vertical market integration you forget that vertical market integration has to do with common ownership. Intel does not own Dell or HP or any OEM. So vertical integration does not apply here.

quote:
When Intel is giving system builders advertising dollars, they certainly do. Does it make sense for Intel to pay Dell to advertise AMD systems?


Again you seem to be blurring things. There is a massive difference between advertising something (on TV?) and buying and selling. If Intel is giving Dell money to advertise Intel systems, then this money is being spent on these advertisements. I do not see Dell TV ads for AMD systems yet, and even if I did see them it would stand to reason that they were not using Intel money to pay for it. How does this suddenly equate to Dell not being able to buy a certain amount of AMD or else prices for Intel chips suddenly go up?


By cochy on 1/17/2007 2:55:31 PM , Rating: 2
quote:
Oops. You're confusing vertical market arrangements with vertical market integration. Two different concepts.


Ok fine. So by "arrangements" you mean an "integration" by companies not sharing common ownership. Then this goes back to what I quoted above. These "arrangements" need to be approved by whatever market watchdog and their reasons need to be valid. There are rules to the Free Market or else it wouldn't be free. So you're right about these arrangements not being illegal in of themselves however. They are a case by case sort of thing and therefore you are just playing around with semantics and bottom line not making any specific points to this Intel case. You're using generalities to make this seem black and white. It ain't.


By masher2 (blog) on 1/17/2007 3:02:15 PM , Rating: 2
> "Ok fine. So by "arrangements" you mean ..."

It's not what "I" mean. Vertical market arrangement is a standard term in economic theory.

> "So you're right about these arrangements not being illegal in of themselves..."

Yep.

> "They are a case by case sort of thing and therefore you are just playing around with semantics and bottom line not making any specific points to this Intel case...."

On the contrary. I detailed specifically when such arrangements are illegal, and further added specific points as to why the Intel case didn't meet that criteria. Perhaps in your rush to judgement, you missed that part of my post?


By cochy on 1/17/2007 3:08:12 PM , Rating: 1
No sorry I didn't miss your points. The only rush to judgment I may have made was that you're not an authority on the subject and since you didn't list sources I figured you may be missing something. Maybe you are an authority/expert on this matter and I shouldn't make that assumption. In that case I'll differ.


By cochy on 1/17/2007 3:36:32 PM , Rating: 2
quote:
No, that's not how it works. Intel gives Dell money to advertise DELL systems...based on the fact that a Dell system is also an Intel system. Quite obviously if a large percentage of Dells wind up being AMD, then Intel shouldn't withdraw those dollars. Nothing wrong with that arrangement.


Forgot to comment on this part. Having seen many advertisements of Dell and HP on TV it is quite obvious that an advertisement for Dell or HP is also and advertisement for Intel. Yes that annoying Intel Inside clip is running through all your heads right now -- doo too too too. It's so annoying it's obvious they are forced to put that clip in. So it seems this is where Intel subsidized advertising dollars are spent, to promote Intel Inside, not really Dell or HP. HP sells lots of AMD machines but I don't recall seeing them advertised on TV.


By masher2 (blog) on 1/17/2007 4:23:27 PM , Rating: 2
> "Having seen many advertisements of Dell and HP on TV it is quite obvious that an advertisement for Dell or HP is also and advertisement for Intel..."

That's exactly the point. Intel cosponsors the advertising...but the item being purchased is a Dell. If Intel funds Dell advertising, and consumers order Dells and-- like most consumers do-- forget to specify an INTELL Dell, then Intel just wound up giving money to its competition.


By cochy on 1/17/2007 2:36:08 PM , Rating: 2
Here's an example and you comment on if it makes sense, is fair, and does not result in artificial market manipulation.

Suppose Supplier A and Supplier B.

Supplier A buys 1,000,000 Intel chips.
Supplier B buys 500,000 Intel chips.

Supplier A is a larger supplier, and serves more customers. Therefore he would like to offer more choice to his customers and decides to buy AMD as well.

Supplier A buys 300,000 AMD chips
Supplier B buys 50,000 AMD chips

Now what happens. Even though Supplier A giving twice as much business to Intel than Supplier B, it is quite possible that his costs for Intel chips is actually higher than Supplier B's. Therefore his prices to his customer on this Intel machines will be higher as this cost is passed to consumers. Is this logical? Is this fair? Supplier A is punished for offering more choice to consumers, something consumers NEED for the market to be free.

Of course Supplier A will be forced by Intel to comply because consumers will buy from Supplier B if his prices are lower. This is a fundamental manipulation of the market based on nothing more than the fact that Intel has greater market share. Having greater market share does not give you the license to strong arm and start competing like this. Obviously this hurts the competition and in turn hurts the consumer as well. The rules of competition should not give advantages like these to market leaders.


By masher2 (blog) on 1/17/2007 2:54:02 PM , Rating: 2
Excellent scenario. What Supplier "A" must judge is what their customers want the most-- Intel systems for, say, $50 less, or the choice to buy AMD. Let's say they choose Intel. They therefore stop selling those 300,000 AMD chips and go Intel-only. They not only get a better deal from Intel, but they save costs from having a smaller product line. Their Intel customers are ecstatic. Prices drop even more.

Now, what about those 300,000 AMD chips and the people who were buying them? They go to Supplier B, who now must make a similar choice. But now the equation is different...he has far more AMD demand and far less Intel (since he can't hope to match Supplier A's larger volume discount no matter what). So he chooses to remain with AMD, and the customer still has a choice. Go with "A" for Intel, or "B" for AMD.

This is a basic economic truism. Even if "B" chose the Intel route, it would do nothing but push even more AMD demand onto suppliers "C" and D". That's why such arrangements don't restrict choice, and are good for the consumer.



By cochy on 1/17/2007 3:04:30 PM , Rating: 2
Alright points can be made both ways. That seems clear. However under this scenario Intel doesn't really to innovate so much or lower prices so much as to compete happily in this other fashion. It would benefit the market more if Intel did need to innovate and did need to lower prices. In reality, we all know that Intel does innovate and does lower prices. Now it's just getting into theory and I'm no expert so I'll stop now lol.

My final word will be, it would be easier on the market if Supplier A didn't need to make that choice based on Intel's policies. It would also seem to make the market more free as supplier A can choose from whatever brand he will without some external pressure.


By masher2 (blog) on 1/17/2007 3:13:05 PM , Rating: 3
> "under this scenario Intel doesn't really to innovate so much or lower prices..."

You're too wrapped up in the high-tech market. Pretend Intel and AMD were competing in selling cheese, or socks say. Vertical market arrangements allow them to still innovate...in making the supply and distribution of products more efficient. That cuts costs for the consumer.

Of course, Intel and AMD DO innovate on technological grounds. In fact, during the period in question, we saw more innovation and price reduction than anyone had a right to expect.

The CPU marketplace is one of the healthiest in existence. It ain't broken...don't try to "fix" it. It'll make things worse, I promise you.


By Axbattler on 1/18/2007 3:08:42 AM , Rating: 2
The problem is, we are not dealing with cheese or socks. We are dealing in a high-tech market with a prohibitive barrier to entry and only two key players (on the desktop anyway). AMD is no small company, but it -is- significantly smaller than Intel. Should AMD become unable to compete, we are not going to see another dozens of replacement (like, say, the MP3 player market), and consumers will suffer for a long time. And if that occurs, it will be too late to wonder whether Intel's strategy, legal or otherwise, wise underhanded and/or unhealthy after all.

I am certainly not suggesting that we should all pity the underdog. If I was to build a new PC today, I would build a Core 2 because it is the better product. But I do not see stopping the only competitor from selling, even partially, as particularly 'healthy'.


By masher2 (blog) on 1/18/2007 9:49:40 AM , Rating: 2
> "We are dealing in a high-tech market with a prohibitive barrier to entry..."

A barrier which exists due to the market itself, not Intel's actions. No matter what Intel says or does, a new Fab for AMD is still going to cost the same, and a new core is still going to require the same amount of R&D.

> " I do not see stopping the only competitor from selling"

AMD was never prevented from selling. There were plenty of system builders which sold their product. If you doubt this, go look at AMD's rising sales figures over the period in question.

Even for the integrators in question, AMD wasn't "prevented" from selling to them. Intel offered the builders a financial incentive to purchase from them. The builders could have chose to continue selling AMD (and in fact, some did). Others made the decision that a lower price for Intel product was worth the exclusive arrangement.

Again, you have failed utterly to prove that even one consumer was ever harmed by the arrangement. In fact, consumers benefitted from it. It gave us lower prices from both vendors, and the fastest, most productive period of CPU innovation the world has yet seen.




By Viditor on 1/17/2007 11:59:24 PM , Rating: 2
quote:
despite its large market share, it does not have the ability to dictate market pricing. If AMD cuts prices, Intel must follow suit, and vice versa


But this was not true in 2000...nor has it been true until recently. One of the main reasons that Intel's Gross Margins have dropped from the 60+ percentile to the high 40s over this last year is that Intel has finally lost it's ability to dictate pricing.

quote:
Any consumer wanting AMD products had countless sources to obtain them

The products themselves, yes. But not the systems that the products were intended to work in.
This is similar to 1999 when Intel threatened motherboard manufacturers against making AMD mobos. They hinted strongly that Intel parts would be more difficult to obtain if they released an AMD mobo...you could still buy the chip, but what's the point?
quote:
Intel spent vast amounts of money to get their products to consumers cheaper. That lowered pricing for Intel products which is a good thing for the market

No...Intel spent vast amounts of money to guarantee that their idea of pricing was the only one available...
As an example, today the pricing of Intel chips at launch is drastically less than it was in 2000 (in today's dollars), and it is very much in line with AMD.
It goes to show that true competition is far more valuable to consumers than the "discounts" allowed in vertical marketing...


By masher2 (blog) on 1/18/2007 9:56:15 AM , Rating: 2
> "But this was not true in 2000..."

On the contrary, Intel and AMD price cuts followed hand-in-hand from 1999 to today. And Intel's entire Netburst architecture was designed to prevent AMD from ever winning the megahertz race...a decision that ultimately backfired on them.

> " today the pricing of Intel chips at launch is drastically less than it was in 2000 (in today's dollars), and it is very much in line with AMD"

Proof positive that competition is alive and healthy. And you want to change this situation? Good god man, think before you post.

> "They hinted strongly that Intel parts would be more difficult to obtain if they released an AMD mobo...you could still buy the chip, but what's the point?"

And yet, in 2000 you could easily buy a motherboard that ran AMD CPUs. I did so myself in fact. So what's your point? At no time was the consumer ever denied a choice between AMD and Intel.


By Viditor on 1/18/2007 5:29:09 PM , Rating: 2
quote:
On the contrary, Intel and AMD price cuts followed hand-in-hand from 1999 to today


Well firstly, that's not possible as Intel sold chips in more areas (where they had no competitor).
But even when AMD was clearly the superior product, Intel was able to charge significantly more per chip because they had effectively cut off support for AMD systems.

quote:
Proof positive that competition is alive and healthy. And you want to change this situation?


Nope, it has evolved nicely...but I think that AMD and the people are due compensation for all of the years that it wasn't.
My own opinion is that it was the lawsuits and charges being filed all over the world that actually forced Intel to come to this point...certainly their previous plan of intimidation and threats was more cost effective for them by a long shot!

quote:
And yet, in 2000 you could easily buy a motherboard that ran AMD CPUs

But of course not so in 1999 when Athlon was released...
BTW, many of those 2000 mobos were necessarily rebadged because the actual manufacturer still couldn't publicly put their name on them...


By Khato on 1/18/2007 7:52:36 PM , Rating: 2
Mmmm, AMD had a slightly superior product from Aug '99 to about Jan '02. In no point during that was Intel at a large performance deficit though. From Northwood launch really until Prescott in Feb '04, performance lead was traded back and forth. Only from Prescott to Core 2 did AMD really have a superior product, a fact that shows in their marketshare increase during this time period. Anyway, there's no real point in conjecture about why Intel was able to keep charging the same for their processors even when the top of the line wasn't quite as fast as the best AMD - it's all meaningless without actual proof.

It wasn't difficult to buy a slot A motherboard back in '99 after the August release, you just didn't have a whole lot of options is all. Feel free to blame Intel for such with baseless rumors, I tend to see such as AMD's shortcoming in platform launch preparations. They simply didn't have the experience/backing necessary to work with every motherboard manufacturer and 3rd party chipset vendors in order to have as much support as the industry was used to from Intel. That's why the initial three 750 motherboards were somewhat flakey and all alone in the market for a few months. You can feel free to join the rumor mill about Asus delaying and only quietly releasing their K7M due to Intel pressure - yeah, I'm sure Intel wouldn't realize they released it if they kept it a quiet launch. (Far more probable that, like the other manufacturers, their initial revisions that they wanted to sell had a few bugs - explains both delay and why initial production run that wasn't up to standards wasn't Asus branded.) All the supply problems went away with the KX133 release in February, Via actually knew how to release a chipset and work with manufacturers to have boards available soon after.

Oh, and you'll also probably remember Intel going after Via on their release of the P4X266 chipset. Yes, one can argue that Intel didn't want to give Via a P4 bus license because of the Athlon chipsets, but that's mostly just conjecture. After all, I'm certain Via wouldn't have minded adding to the rumors at the time in order to pressure Intel into letting them have a license.


By masher2 (blog) on 1/18/2007 9:41:00 PM , Rating: 2
> "even when AMD was clearly the superior product, Intel was able to charge significantly more per chip because they had effectively cut off support for AMD systems."

No. Because they owned the Intel brand, a name which was worth big bucks, especially at the corporate level. Did you never hear the phrase, "no one ever got fired for buying Intel"? I know plenty of Fortune 100 firms that, until a year or so, didn't even ALLOW the purchase of AMD-based computers. Period.

You're living in fantasy land. AMD's sales from that period weren't poor because millions of wannabee-buyers couldn't find product. They were poor because the majority of buyers didn't WANT AMD. They wanted the Intel brand.

And you've still dodged the primary point. The CPU marketplace is perhaps the healthiest in the world, competition wise. Prices drop like lightning, and new products appear constantly, with features and performance far above models just months older. The competition here couldn't be healthier. Any government intervention will only break what isn't broke.



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