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AMD's Hector Ruiz tells what it's like to compete against an "abusive monopolist"

AMD CEO Hector Ruiz took center stage at the American Antitrust Institute National Conference in Washington, D.C. to express his disdain for Intel’s business practices.

“I want to give you an idea of what it’s like to do business day in and day out when you are competing against an abusive monopolist,” Ruiz told attendees. “How it makes no difference whether you are just as efficient – or even more efficient – than they are.”

“I do not need my fortune teller hat to tell you one truth about which I am absolutely certain,” said Ruiz. “There is no proper or defensible place for illegal monopolies in the 21st century global marketplace... My purpose is not to argue for competitive advantage - we know how to compete. My purpose is to lay out the facts so that law and economics can do their job to protect consumers."

Ruiz did not immediate call out Intel, but rather stated his case first by naming several related companies made possible by the allowance of new entrants. “Google, Microsoft, and computer manufacturers like HP and Dell all owe their existence to the simple fact that competition replaced forced exclusivity and allowed a variety of players to compete and succeed,” he said.

The AMD boss then called out its arch rival, boldly stating, “Intel uses illegal tactics explicitly aimed at preventing customers from doing business with AMD.”

AMD has been battling with Intel in the U.S. courts over what it believes to be anticompetitive practices. Ruiz presented the example of his company’s efforts with HP, where the systems builder feared retribution by Intel if it chose to use AMD processors.

Dell is facing a class action lawsuit from its own investors over “secret and likely illegal” kickbacks by Intel to ensure the exclusive use of its chips inside Dell computers. “Computer manufacturers are dependent upon Intel's ‘rebates’ for a large portion of their razor-thin operating margins and must sacrifice their brand in favor of promoting Intel,” Ruiz adds.

“The IT industry is being held hostage by Intel – a fact that has detrimental effects across the board, and it has gone on for too long,” continues Ruiz. “Customers get hit by less choice and PC manufacturers depend on rebates and "must sacrifice their brand in favour of promoting Intel.”

“I think that is a vision we share, as business leaders, regulators, economists, lawyers, and others dedicated to ensuring fair and open competition in the market. And I believe it is our responsibility – not just to the global economy, but to society as a whole – to make that happen.” Ruiz later concludes, “In an IT industry without an abusive monopoly, computer manufacturers are empowered to flourish because innovation and differentiation are rewarded – rather than be obligated to a single supplier. The benefits are passed on to consumers through lower prices and greater choice in the marketplace.”

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I've seen this first hand
By 91TTZ on 6/25/2007 12:47:30 PM , Rating: 5
I used to work at a motherboard manufacturer about 10 years ago. Intel was doing it then, too. The motherboard market is extremely competitive with very thin profit margins. If you can't get a board out the door in a timely fashion, your business goes out the window.

During this time, we made Socket 7 motherboards. We had to include AMD and Cyrix CPU support as an "undocumented feature" because if we advertised the fact that the board supports Intel's competitors, Intel would play VERY dirty. They'd run into "chipset shortages" and withhold shipments of chipsets to your company while your (Intel-loyal) competitors get their chipsets and ship product out the door. They'd also be late in delivering specifications for reference boards to you while your competitors get theirs on time and get a jump on engineering new boards while you have to wait.

This was an open secret at the time, so it's not really going to surprise anybody in the know. Intel broke the law and they should pay. Their size and clout should not buy justice.




RE: I've seen this first hand
By bldckstark on 6/25/2007 12:56:17 PM , Rating: 5
Just a minor point, but rarely is justice bought. Usually IN-justice is bought.


RE: I've seen this first hand
By Polynikes on 6/25/2007 1:22:09 PM , Rating: 5
I think this is the point some people on here are missing. Intel has played very dirty. It's not about AMD's lack of competitive products at the moment.


RE: I've seen this first hand
By RogueSpear on 6/25/07, Rating: 0
RE: I've seen this first hand
By omnicronx on 6/25/2007 2:05:10 PM , Rating: 5
AMD never made anyone buy the FX models that were 'overpriced'
The Fx was the enthusiast model with an unlocked multiplier etc... etc.. I have always found the price of AMD products really good, heck i bought my opteron 170 for 300 bucks over a year ago before the price drops and it was still cheaper than a so called equivalent Intel cpu that did not perform at the same level.

i am not an fanboy of any chip manufacturer btw, i always buy a cpu that has the best for buck, and in the past 10 years.. this happens to usually be AMD


RE: I've seen this first hand
By TomZ on 6/25/07, Rating: 0
RE: I've seen this first hand
By Spoelie on 6/25/2007 5:00:51 PM , Rating: 5
Setting the price as high as possible for all the volume you can sell is NOT abusing your market position, at least if you're not a monopoly. In fact, in a capitalist market, it's stupid not to do so.

Coercing partners into other terms and agreements that have nothing to do with trading goods, in order to trade those goods, that my friend, is abusing your market position, and forbidden by law.

AMD and Intel are both 'guilty' of the first one, but this is only 'annoying' for us, not illegal. Intel at least is supposed to be guilty of the second point.

Also, the accusations and lawsuit are in regard to past and current(?) behaviour, not to any declining market share. In fact, market share has nothing to do with it. If AMD's market share were not particularly held back during those actions (which would be kind of illogical, but suppose), Intel would still be held liable for those actions.


RE: I've seen this first hand
By TomZ on 6/25/07, Rating: 0
RE: I've seen this first hand
By Oregonian2 on 6/25/2007 6:31:04 PM , Rating: 4
Even when AMD's products were both better and lower priced, Intel still had at the deep depths of their marketshare something over 70 percent. Not exactly a minority share during bad times, and it's now going back up.


RE: I've seen this first hand
By Andrwken on 6/26/2007 2:31:56 AM , Rating: 5
But when AMD had the superior product, they did gain marketshare. Is there a rule that says the marketshare must become lower than your competitor just because your not the best choice. You are leaving out the mindshare advantage Intel had leveraged through the time when AMD was playing on top.


RE: I've seen this first hand
By dever on 6/26/2007 1:14:14 PM , Rating: 3
Plus Intel out-classed AMD on marketing exponentially. Marketing alone could account for the difference in market share.


RE: I've seen this first hand
By Oregonian2 on 6/26/2007 8:05:48 PM , Rating: 3
I'm sure all of those things that some folk are complaining about would just be called "superior marketing" by Intel.

Intel's biggest advantage isn't that though. It's their manufacturing that's a one or two years ahead of AMD as well as being tremendously larger. Their long years of huge capital investments pays off. When Intel came out with Conroe to turn around the tide, it was in 65nm rather than 90 which AMD was using. That undoubtedly was part of their product's superiority, not just a better design.


RE: I've seen this first hand
By KnightProdigy on 6/28/2007 8:46:52 PM , Rating: 2
When AMD had the better products at a better price(I still feel their architecture is far superior to Intel) Intel's marketshare was ONLY residual marketshare from the monopoly they created 20yrs ago.
The fact that AMD gained a lot of ground in the last 5 yrs shows MORE than what people are willing to admit to. The numbers may be somewhat small and many Intel fanbois will judge based on this, but they do not realize the older and saturated intel market that the "marketshare" numbers are pulled from. Not to mention, most of that is based on businesses that were polled. Not consumers or enthusiests that are able to make an educated decision.

Many new buyers are like sheep. I know and deal with many workers for computer companies and they all have the same stories... people goto dell because someone they know owns a dell. people use intel in their 10+yo desktop at work so they will buy intel.

The marketshare numbers are BS.
Sorry.


RE: I've seen this first hand
By Spoelie on 6/26/2007 11:50:57 AM , Rating: 2
You are severely oversimplifying matters, and using only 'logic' instead of any knowledge of actual laws.

The fact if Intel is a monopoly is entirely defined by its definition in law, so even during its lowest amount of market share, it could still be termed a monopoly if it fulfills all the requirements. The fact that AMD did have and improved market share, is no basis for discounting any monopoly accusation. I do not know the US law definition for a monopoly, so I cannot tell if Intel is considered as such.

Second is that the law that forbids those extra arrangements, as far as I know , does not state the requirement that the company doing them, is a monopoly. The company needs to be in a position where it can enforce those terms on its partners, that's all. Saying that Intel is not a monopoly and thus allowed to exert such practices, would, by my understanding of the law, be incorrect.

Also, the fact that AMD increased market share, is not a basis to completely discount the accusations. Intel could have used those practices on only one company, without severely impacting market share. As long as Intel did it, they can be sued for it.

Lastly, it could very well be that Intel didn't do those things during the K8 era. Intel can be sued as long as they did it once during any past time period where the crime hasn't legally "aged" yet.

AMD needs the evidence to support all those accusations of course.


RE: I've seen this first hand
By TomZ on 6/26/2007 2:43:51 PM , Rating: 1
quote:
You are severely oversimplifying matters, and using only 'logic' instead of any knowledge of actual laws. ... I do not know the US law definition for a monopoly

OK, so let me get this straight - you're saying I don't know and/or are not applying the law, and then you admit to now knowing the law yourself? That's priceless.

Anyway, I've never heard of tying being illegal for non-monopolists. In fact, tying is pretty common in all areas of commerce today, and it seems to pose no legal problems for anybody else. Maybe you can reference the law where you think it is generally prohibited?
quote:
Also, the fact that AMD increased market share, is not a basis to completely discount the accusations. Intel could have used those practices on only one company, without severely impacting market share.

You're missing the point. In order to go after a company for anti-trust violations, you have to show they are in fact operating a "monopoly." There are different definitions of "monopoly," and some of them involve marketshare, while others refer to having the ability to set prices in a market. During the time in question, AMDs marketshare went to between 20 to more than 50% marketshare, depending on the area you look at. In addition, AMD also deprived Intel of the ability to set prices how it wanted, since clearly they had to set prices based on AMD prices. Those two things, in my opinion, undermine an argument that Intel was operating as a monopolist. This, in my mind, undermines the credibility of Ruiz' complaints (whining).

No, I'm not an attorney - so that's the best I can do is to apply common sense and logic and see how far it gets me. Anyone with more knowledge (that excludes you, Spoelie!) please feel free to explain if I am wrong.


RE: I've seen this first hand
By Spoelie on 6/26/2007 3:17:57 PM , Rating: 3
quote:
OK, so let me get this straight - you're saying I don't know and/or are not applying the law, and then you admit to now knowing the law yourself? That's priceless.
Your statement is completely devoid of any logic. How does not knowing the precise formulations of a single law imply that I do not have any understanding on how (some) law(s) work(s). I never did claim to be a lawyer in this field, nor do I even live in the US, so even then it wouldn't interest me all that much. All I was saying was that your deductions are not based on laws, and the issue in this article is about legality, not about being fair or nice.
quote:
No, I'm not an attorney - so that's the best I can do is to apply common sense and logic and see how far it gets me. Anyone with more knowledge (that excludes you, Spoelie!) please feel free to explain if I am wrong.
Common sense and logic will get you nowhere in a court of law. Real mature, that personal comment.

Intel can commit illegal, anticompetitive acts from a "position of power". Whether YOU have heard of it or not is irrelevant.


RE: I've seen this first hand
By TomZ on 6/26/07, Rating: 0
RE: I've seen this first hand
By TomZ on 6/26/07, Rating: 0
RE: I've seen this first hand
By Spoelie on 6/26/2007 4:14:45 PM , Rating: 2
Yes I actually had one or two courses on law, the thing is, those were on European law, anticompetitive laws are similar tho. Today was the first time I "opened" a US code book, so forgive me if I have a little trouble finding the right sections. http://en.wikipedia.org/wiki/Title_15_of_the_Unite... is not really that small. Chapter 2 might be more appropriate then, if it is not only limited to export trade. The title is a little ambiguous.

The Wikipedia article give a general look on a monopoly, more out of an economic point of view then justice, so still a tough pill to swallow ;). Tying product isn't really what we're looking for, out of this list:

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

Refusal to deal and exclusive dealing may be more appropriate, but the articles themselves are not that useful.


RE: I've seen this first hand
By Ringold on 6/26/2007 7:06:00 PM , Rating: 2
Single Seller: It's not even close
Barriers to Entry: It'd require a lot of capital, but these days there's lots of capital available. Zero legal barriers.
No Close Substitutes: AMD and Intel are fully interchangeable as far as software goes. IBM also in theory makes chips, as does VIA..
Price Maker: This is what happens when wikisocialists write wiki entries instead of actually going to class. Correct theory (I love how they came up with a chart intentionally made to maximize the appearance of producer surplus and deadweight loss, I bet it took them a little while to tweak it to get it just right), but almost every significant firm in every industry can exert pricing power.

I don't know about the Sherman Anti-Trust law, but we look askance on a multitude of monopolies and near-monopolies across the country. The correct term for both in an economic sense would be oligopolists. If we're going to cry because AMD gets pushed around how can we in good conscious allow Boeing to continue to exist? What about local utilities? What about local cable firms?

Do I feel bad for AMD? Yep. Can we really call Intel a true monopoly? Not at all, not even close, for it fails every major benchmark.


RE: I've seen this first hand
By Spoelie on 6/26/2007 3:40:46 PM , Rating: 2
I was so kind to look it up for you:
http://www.law.cornell.edu/uscode/html/uscode15/us...

Sections 1, 2, 13 and 14 are of particular interest (probably even more articles, but I'm not gonna go through all of them)

An excerpt of 14 reads like this:
"It shall be unlawful for any person engaged in commerce, in the course of such commerce, to lease or make a sale [..], or fix a price charged therefor, [..], on the condition, [..] that the lessee or purchaser thereof shall not use or deal in the goods, [..] of a competitor or competitors of the lessor or seller, where the effect of such sale [..] or understanding may be to substantially lessen competition or tend to create a monopoly in any line of commerce."

Can you indicate where the requirement is made to already be a monopoly?


RE: I've seen this first hand
By TomZ on 6/26/07, Rating: 0
RE: I've seen this first hand
By Spoelie on 6/26/2007 4:32:20 PM , Rating: 2
As outlined in the other post, maybe chapter 2 then. But, just to be sure, isn't that title just an indication on what the content of the sections are about? I interpreted it as 'laws regarding the subject of monopolies and regarding the subject of combinations in restraint of trade'. It would be a bit strange that the paragraph is implicitly dependent on the wording of the title. In section 8 and 12, they give definitions of how to interpret "Person" in other sections, and there's hardly any speaking of a monopoly.

You see that I'm a bit careful in my wordings, since I'm not too sure about it all, a real lawyer would be coming in handy right now.


RE: I've seen this first hand
By Mk4ever on 6/26/2007 3:56:18 PM , Rating: 2
quote:
No, I'm not an attorney


And yet you are still talking.

It's nice how whenever I read an article I see you posting and my eyes see your name as "Mr.Expert"

Mr. "not a attorney", You say that AMD is no better than Intel. Well as far as I know no one could prove that. I would like to see a law suit soon with your name in it against AMD proving that.

quote:
Anyone with more knowledge (that excludes you, Spoelie!)


Sorry Mr Expert for all those people standing in your face or arguing with you. After all, you are truly the smartest person ever of all time and no one should argue with you.


RE: I've seen this first hand
By TomZ on 6/26/07, Rating: 0
RE: I've seen this first hand
By mars777 on 6/27/2007 2:22:47 AM , Rating: 2
I don't know their points, but mine is:

Stop trolling this site, 'cause I'm trying to read constructive comments and not sh*tload a of trolling posts.


RE: I've seen this first hand
By InsaneGain on 6/27/2007 2:22:18 PM , Rating: 2
TomZ, honestly , do you have any personal interests in Intel? Or do you have a tendency to always cheer for the biggest, most advantaged team with the highest chance of succeeding? I find issues like this interesting more for their revelations of how biased and unobjective people generally are how desperately they will ignore or dispute facts that don't support their biased position.


RE: I've seen this first hand
By TomZ on 6/27/2007 3:24:29 PM , Rating: 1
No, I have no personal interests in Intel. I just think that AMD is trying to blame Intel for its problems that seem to be mostly self-induced.

I spent the first 10 years of my professional career supporting and being an advocate for the "underdog," e.g., AMD instead of Intel, Borland instead of Microsoft, etc. But I realized that most often the path of least resistance, and where the greater effectiveness is, lies with being where the masses are, i.e., siding with the dominant player. In other words, most of the time that a product is popular, it is because it is good.

I also believe that while Intel, Microsoft, and companies like this have made some mistakes along the way, that they have improved in their behavior, and that they are not deserving of the blatent bias and hatred against them that I see often expressed here in the comments section. I believe that some people always root for the underdog, thinking that the dominant player is somehow "evil." This causes people to react beyond logic (as you say) and put forward really biased opinions.

Regarding AMD, I was a fan of AMD, and used their processors in several machines a while back. Then Intel came out with better products, and I switched over to buying those. My bias is with the better product, and also against what I perceive is mostly PR BS like what Ruiz is spewing forth as described in this article. I'm not saying that Intel is an innocent angel in all this; I'm just saying that Ruiz is taking zero responsibility for the relatively poor performance of the company he leads. Instead, he just blames the it on the "abusive monopolist." I don't buy that.


By Crank the Planet on 6/26/2007 6:34:16 PM , Rating: 3
Yeah and all you dupes are missing the point. Intel has flagrantly strong armed companies into using only their products, or to use mostly their products. That is a violation of the law. This means Intel has FLAGRANTLY VIOLATED THE LAW for business gain. This is what Intel has done and what they are continuing to do. This is ILLEGAL.

AMD is not strong arming any company to sell only it's products. They may have overpriced some products but they never forced anyone to buy them.

That is why I will never support Intel until they change and I just don't see that happening. So I don't care if Intel comes out with the one chip to bind them all, I will never support them and I actively persuade others to do the same. If AMD decides to do the same then I guess I will be relegated to the lesser of two evils. Besides wait until Fusion comes out- hehe :)


RE: I've seen this first hand
By just4U on 6/25/2007 3:24:55 PM , Rating: 5
So is AMD the text book example of a warm, fuzzy, fair playing company? I can't imagine that they've never tried to get an unfair advantage somehow..

Amd has never been in a position to try and gain a unfair advantage. Doing something like that would definitely kill them. They are involved in open source projects and are "known" to bend over backwards in the being "helpful" department. Atleast this is the perception I've gained of the company over the past 10 years.

As to your comment about price gouging.... I've never seen it with them ever. Even when they can command the highest prices overall (and they have at times) they have always tried to stay competitively priced.

They have played the good guy role for a long time and I think that's part of the reason they are still around. If David was some jerk no one liked Im sure going up against Goliath just wouldn't be a story anyone was interested in.


RE: I've seen this first hand
By DallasTexas on 6/25/07, Rating: 0
RE: I've seen this first hand
By ebakke on 6/25/2007 6:49:04 PM , Rating: 2
Strong global competitor = Above the law? Above ethical behavior?

Before you try to hum and haw your way through a response - don't bother. You made it perfectly clear that you (like the operators of the company you own a part of) are interested solely in increasing your wallet and will find a way to justify the means to that end.

CPU prices, release schedules, product specs, market share, etc are all out of the scope of this article and of AMD's legal battle with Intel. How are so many people unable to see that?


RE: I've seen this first hand
By Justin Case on 6/25/2007 6:54:15 PM , Rating: 4
For someone who claims to have "specified which chips to buy in an aerospace company", you seem to be seriously (I daresay dangerously) misinformed.

First, AMD actually helped Intel with the (physical) design of the x86 (which is why Intel let them have an essentially "free" license to make x86 chips - it wasn't exactly out of the kindness of their hearts).

Second, AMD has been using completely original designs since the K5 (developed in 1994, 13 years ago).

Third, AMD never intended to make a Pentium Pro clone (a very niche market), the K5 was designed to compete with the mainstream Pentium (and it was, in many ways, a superior design, although poorly executed).

Fourth, HT was introduced with the K8, and was definitely not "licensed from Compaq" (Compaq wasn't even part of the HT consortium). You might be thinking of the EV6 bus, but that was actually licensed from DEC, and used in the K7 (a.k.a. Athlon).

Finally, pretty much all of Intel's current designs came from Israel (so much for it being "an American company"). Not that that's a bad thing, mind you; Intel USA was the one that kept flogging the dead Netburst horse.

Could you please let us know which aerospace company you worked for? I for one would like to avoid flying on anything they made. Thanks.

Regarding this article: the issue isn't which companies are "nice", it's which ones comply with the law and which ones don't. AMD (or Intel) is free to price their CPUs at a million dollars each. But they are not free to say to motherboard companies "if you buy from our competitors, we'll screw you". If it's confirmed that Intel did that, I hope they're forced to pay at least twice as much as they profited. Anything that reduces competition hurts consumers and slows down innovation.


RE: I've seen this first hand
By copiedright on 6/25/2007 8:18:41 PM , Rating: 1
Could not have said it better myself!!!


RE: I've seen this first hand
By DallasTexas on 6/25/07, Rating: 0
RE: I've seen this first hand
By TomZ on 6/25/07, Rating: 0
RE: I've seen this first hand
By Ringold on 6/26/2007 7:12:29 PM , Rating: 3
Likely a low popularity rating due to him being silly enough to register with the same name here as he as at HardOCP. I haven't looked through the forums there in a while but the names of the most shrill trolls can never be forgotten.


RE: I've seen this first hand
By DrMrLordX on 6/26/2007 6:34:56 AM , Rating: 4
Several statements of yours are factually inaccurate.

1). AMD stopped "copying Intel's socket" when they released the SlotA Athlon. And, no, SlotA was not the same as Slot1.

2). If you examine the K5 microarchitecture, you will find that it was quite different from the Pentium and Pentium MMX. In fact, take a look at this:

http://www.pcguide.com/ref/cpu/fam/g5K5-c.html

"The K5 is not a Pentium "clone" in the traditional sense of the word, because it is a totally different internal design. It is also not 100% Pentium compatible because it is not an exact clone. However, it is a very close approximation, and suffers from fewer compatibility problems than the 6x86."

So far as I know, they designed the K5 in-house without copying Intel's (or anyone else's) design.

3). AMD does invent things. Here are a few of their better-known inventions/innovations that they neither acquired nor licensed from others:

K5: see above
3dnow!: Not like it mattered . . .
K7: The Athlon was a 100% original in-house AMD design. EV6 was DEC's design, but the Athlon was not.
K8: Just like the K7, the K8 was AMD's baby. They also engineered the K8's memory controller all by themselves. Several variants, in fact. In the process of inventing the K8 processor, they also invented Hypertransport and x86-64.

Yes, that's right, x86-64, the instruction set that Intel was eventually forced to copy (Intel's version is EM64T).

In a few months, we'll be seeing another one of their inventions. Several of them, in fact. We should all hope that they work out better than did 3dnow! and the K5.


RE: I've seen this first hand
By Targon on 6/26/2007 6:43:38 AM , Rating: 2
Since Athlon FX processors are and were never intended for the general consumer, saying they would "gouge their customers" is really not correct in any way. AMD has stayed price competitive, but in general, even when they were on top, never set the prices higher just because of their position.

Now, keep in mind that there is a difference between operating as a large company and using bullying tactics in order to sell their processors. Playing fair means they will supply product to the customers at the agreed on price, and will not delay or limit delivery of the product(s) just because of actions of the customers.

I remember the Asus A7M motherboard, which came in a plain white box, with NOTHING to shout that it was an Asus motherboard designed for the AMD Athlon, simply because they were afraid that Intel would get upset if Asus made too much "noise" about their AMD focused products. Why should a company need to be concerned about selling a non-Intel motherboard if there was no threat, real or implied?

If you are trying to imply that AMD would push companies not to use Intel processors, you really can't know that. It's fine to encourage increased sales of YOUR products, just not with implications that you must also limit sales of your competitors. That is what makes the Intel actions illegal. Intel has enough advantages in terms of marketing, size, manufacturing capacity, and in budget where they should never have needed to use threats to keep their marketshare. That is the whole point of the lawsuit.


RE: I've seen this first hand
By Samus on 6/25/2007 4:05:17 PM , Rating: 4
Right, because quite obviously Intel DOES make a better CPU right now. It's about how AMD had made such a great product the past few years, just leaps and bounds better than NetBurst, and they couldn't even break 25% market share. Seems a little strange.

It also seems strange how Dell didn't use AMD processors until Core 2 was released. As a big company, Dell had samples of Core 2 months before it was released, knowing it was going to be a hit, then decides to use AMD processors? It's all in their favor, even now, because they still have Intel in their back pocket. Their stock holders are pissed, and they should be. Everyone was forced to buy Dells with Pentium 4's from 2000-2005, when AMD, during the entire time, made a better product with the Athlon, Duron/Sempron and Turion.

It's hard to believe how Dell got away forcing all that NetBurst crap on their customers, when they knew all along AMD was a better choice for many of them, but didn't offer it as an option anyway.


RE: I've seen this first hand
By TomZ on 6/25/2007 4:18:40 PM , Rating: 1
quote:
It's about how AMD had made such a great product the past few years, just leaps and bounds better than NetBurst, and they couldn't even break 25% market share. Seems a little strange.

There are a bunch of factors that you're ignoring.

1. Momentum. It takes a whole market some time to switch over to something better.

2. Choice Criteria. People don't always buy the thing with the best engineering specs!

3. Brand/Marketing. Intel's branding and marketing were always much stronger.

4. System Approach. Intel's being able to supply processor, chip-set, integrated graphics, and even motherboards is an advantage that AMD never really enjoyed (prior to the ATI acquisition, at least)

So, to me it is not surprising that they just cracked 20-25% market share (which is very good, I think), despite having a "better" product.


RE: I've seen this first hand
By just4U on 6/25/2007 4:25:47 PM , Rating: 2
You can't deny tho that they'd most likely have enjoyed even more success with the big oem's all on board and fully co-operative.

I mean they'd sell more intel anyway but if your main supplier is playing games these oems are less likely to take as much of a chance on Amd Product (or as in dells case ... ) I think that is what is at the heart of all of this.


RE: I've seen this first hand
By TomZ on 6/25/2007 4:30:22 PM , Rating: 1
quote:
You can't deny tho that they'd most likely have enjoyed even more success with the big oem's all on board and fully co-operative.

No, I don't think so. It is pretty well known that AMD was running at 100% manufacturing capacity during that time period anyway. For them to have supplied more parts, they would have needed to started building new fabs 5-10 years earlier, which they didn't. There's no way AMD could have supplied even a fraction of Dell's business.

Now that AMD has better manufacturing capability, they lack competitive products. Sounds like mis-management to me.


RE: I've seen this first hand
By just4U on 6/25/2007 4:35:22 PM , Rating: 2
Hmm... there's something to be said about that as well (naturally there are many factors that play a role in why amd is currently in the state that it's in)

BUT.. I disagree with you on the 100% capacity. I mean there was allways Amd cpu's in stock everywhere I looked. From low to highend. I don't ever recall a time where I went to shop for a cpu and Amd was sold out.


RE: I've seen this first hand
By TomZ on 6/25/2007 4:40:03 PM , Rating: 1
You were looking at the retail market that buys 1000 pieces at a time for end users 1-2 at a time, compared to a Dell which would order tens or hundreds of millions of pieces at a time. Big difference there.


RE: I've seen this first hand
By just4U on 6/25/2007 4:50:13 PM , Rating: 2
Oh I know, but given the "what if" scenario having the huge oem contracts in play would have meant ramping up more production (which has been a hurdle for amd). Considering the fact that they always hit a brick wall where dell was concerned it was a non issue. Opening the door leads to those opportunities.

I mean really.. Amd doesn't advertise enough, they don't have the facilities to produce what Intel does, or the funds, Nor do they have the brand recognition. All of these things work against them but having Intel stack the deck even further as AMD contends just makes you think uh .. wow!


RE: I've seen this first hand
By TomZ on 6/25/2007 4:54:19 PM , Rating: 1
I see what you're saying, but you can't just immediately offer to sell hundreds of millions of units. You have to have the capacity first, then sell it. You can't sell the units and then scramble to build the capacity. Fabs take many years to build.


RE: I've seen this first hand
By just4U on 6/25/2007 5:00:09 PM , Rating: 2
Nope that got them into trouble already as they had to take from the retail space to supply the oem's. (after dell came on board)I seem to recall people saying that Amd angered the retail segment that has supported them for so long.. (don't know much about it really) BUT not having the product because it's always sold out seems to me to be a much better scenario.. overall that is.


By Performance Fanboi on 6/26/2007 12:47:25 AM , Rating: 2
Yep - lots of people were trying to buy 5000's when they came out. The backorders were so bad a couple of retailers I deal with started offering 5200's for the same price if you'd wait for the 'indefinite' delivery. Problem was (for AMD)if you didn't already have the AM2 board it was a simple choice to go with a C2D (and save a couple of bux in the process). I, and many others, felt screwed over by AMD - Dell snaps thier fingers and gets CPU's - I support AMD since Athlon days and get "No soup for you"!


RE: I've seen this first hand
By Ryanman on 6/25/2007 8:33:51 PM , Rating: 1
You forgot that the vast majority of people who buy dells are idiots. They don't care if it runs well, has good customer support, or has crap shoveled on the hard drive. They see the price tag and thing "Pentium!I've heard that before! and dell says it runs good! it must be amazing."


RE: I've seen this first hand
By Parhel on 6/26/2007 1:50:16 AM , Rating: 2
I'm replying to you from my Dell, which I purchased a year and a half ago. It was under $500 shipped and included a 20.1" LCD @ 1600x1200 in addition to a fully functional computer. Try putting together a deal like that on Newegg or wherever you buy parts. Even today, it wouldn't be easy.

I bought it because it was a good deal, not because I care what company assembled my PC. But I have no problem with it's quality, and it happens to be one of the quietest system I've ever used, probably due to the microBTX form factor.

Dell's customers aren't idiots anymore than people who assemble their own systems are. Not everyone is a gamer or cares if they have the latest and greatest, and Dell has some pretty good prices from time to time.


RE: I've seen this first hand
By darkpaw on 6/26/2007 2:03:28 PM , Rating: 2
Most dell users are idiots, but people that know what to look for can also get some pretty good deals.

If anyone asks me to build a low level pc for them, I tell them not to bother just buy a dell on sale. I can not touch their prices on the low end (especially including a display and OS).

Now if you want a gaming machine thats a whole nother story.


RE: I've seen this first hand
By Black Rainbow on 6/25/2007 2:58:20 PM , Rating: 2
That is exactly the problem. If companies like Intel would stick to making a single prodct, there would be no issue at all, but because they fabricate chipsets and stuff too, they have some tricks up their sleeves if they want to start playing dirty.


RE: I've seen this first hand
By vignyan on 6/28/2007 8:04:01 AM , Rating: 2
So Intel gives the OEMs gifts on their "only INTEL" campaign. So whats wrong with that. Let AMD do the same. If Intel offers 20% discount, let AMD offer 21%. How can this be anything other than Bussiness. If Dell offers a similar configured computer to you at $100 lesser than HP or IBM, why would you not buy it? And as per the OEM orders, its actually the other way around. If you think OEMs are at the mercy of the chip companies, think again. Intel faced heat from HP and channel partners and AMD faced heat from Channel partners. Its because of the OEMs and channel partners that the chip companies make money.

So ultimately what i want to say is that, business is competetive. Intel or AMD, everyone has to run the business. stop cribbing and start performing! :)


RE: I've seen this first hand
By nah on 6/29/2007 12:46:07 PM , Rating: 2
this is interesting---just the other day i spoke out against intel's plan to dominate the market with RDRAM and the i820 chipset and got voted down

the attitudes of DS readers are interestingly refreshing :)


Not a lot of details
By Puddleglum1 on 6/25/2007 12:31:02 PM , Rating: 1
quote:
The AMD boss then called out its arch rival, boldly stating, “Intel uses illegal tactics explicitly aimed at preventing customers from doing business with AMD.”
70 MPH on the highway is an illegal tactic. Ruiz, what exactly has Intel done? Not that I don't doubt that Intel may be completely in the wrong for some cases, but Ruiz needs to be more specific if he wants his words to carry any weight.




RE: Not a lot of details
By Goty on 6/25/2007 12:51:02 PM , Rating: 3
If you look up some of the articles on DT about the lawsuit you'll get all the details you need. The people Ruiz is speaking to here probably already know everything they need/care to know.


RE: Not a lot of details
By oTAL (blog) on 6/25/2007 1:27:00 PM , Rating: 5
Yup... like another poster said, this is very typical. Yes, Intel has the best technology and yes they deserve being in front these days. But AMD's accusations have been confirmed by other people in the industry. I remember that AT or DT posted an interesting piece when this story first started.

The truth is that in the P4 days AMD produced very competitive products and maintained a better value than Intel for a long time.
So why were they doing badly in the K7 days? Because Intel would force builders to sell low quotas of AMD processors or loose marketing dollars and discounts. They would have to sell a certain number of Intel systems for each AMD system, independently of the market demand, or they would be unable to compete on the Intel front.
As for mainboard manufactures those were also bullied into a quota system in which they would either produce X Intel boards for each AMD board or face the wrath of intel, including delays in chipsets, loss of marketing and promotion money, etc.

AMD does have a point here and they deserve to be taken seriously. Monopolies harm the consumer!
On a side note, my new notebook is Intel powered, and I own Intel stock since I believe the giant is now awake and they have the potential for great things in the near future. I'm just glad AMD is around to keep them in check and I hope they can handle the beating they're taking until they come out with something good.


RE: Not a lot of details
By jacarte8 on 6/25/07, Rating: 0
RE: Not a lot of details
By Black Rainbow on 6/25/2007 3:01:25 PM , Rating: 5
The harm will be done when AMD goes bankrupt. Let's see how much Intel processors will cost then, when they don't have to compete on the price-front anymore...


RE: Not a lot of details
By TomZ on 6/25/2007 4:10:43 PM , Rating: 2
A reminder: AMD started the current pricing war. They made the strategic mistake of picking a fight they couldn't possibly win - and one they really can't afford to lose.


RE: Not a lot of details
By Phynaz on 6/25/07, Rating: 0
RE: Not a lot of details
By Samus on 6/25/2007 4:12:14 PM , Rating: 3
Right, the reason its great for consumers is because AMD is keeping it that way by eating billions in losses.

They are trying to get around the chipset monopoly power Intel uses by having an exclusive chipset of their own (the goal of the ATI/AMD merger) but even thats costing them billions, and it still wont completely eliminate the chipset pressure Intel puts on vendors.

With fair competition, the prices would still be where they are now (or close to it) but both Intel and AMD would be doing well because AMD would be selling more chips, and more chips means higher profit margin. Intel would at the same time be selling less chips to account for AMD's better sales, but then again, Intel can afford to turn over a quarter of their market share, they did NET almost a billion dollars profit last quarter. AMD's NET was a almost a billion in losses.


RE: Not a lot of details
By TomZ on 6/25/07, Rating: 0
RE: Not a lot of details
By Phynaz on 6/25/2007 11:47:23 PM , Rating: 1
Good observation.


RE: Not a lot of details
By Black Rainbow on 7/4/2007 5:34:48 AM , Rating: 2
Not really, what AMD does is make sure that they at least have something, even if they lose the lawsuit. Furthermore, I don't believe AMD's goal is to attain a monopoly, rather to make the market division more equal.


RE: Not a lot of details
By crystal clear on 6/26/2007 1:35:25 AM , Rating: 2
There are already prospective buyers in the waiting for such an opportunity to BUYOUT AMD !

Just that you dont hear/read about them.

AMD is here to stay-you can be rest assured.


RE: Not a lot of details
By crimson117 on 6/25/2007 4:09:11 PM , Rating: 3
Even if a company has stopped committing a crime, they still have to pay for when they committed it in the past.


RE: Not a lot of details
By TomZ on 6/25/07, Rating: 0
RE: Not a lot of details
By Oregonian2 on 6/25/2007 6:35:25 PM , Rating: 2
There have been many articles listing alleged things iNtel has done. Seems like there's such an article every few months that I see, so they must be very much more numerous than that.


RE: Not a lot of details
By Puddleglum1 on 6/25/2007 7:43:47 PM , Rating: 3
I understand that there is a lot of tension with this current price war with AMD. However, Ruiz doesn't once mention [i]how[/i] Intel is acting anti-competitively. My reaction to Ruiz's comment is precisely that there are no anti-competitive [i]crimes[/i] with Intel currently.

FTC doesn't have a case against Intel since 1999.
http://www.ftc.gov/os/caselist/d9288.shtm
http://en.wikipedia.org/wiki/Intel#Competition.2C_...

The industry is lucrative, margins are low, and AMD will not stay afloat using unsupported claims. In my opinion, if AMD has a legit claim, we will soon find out. Until then, I'll just continue to wonder about the meaning of life outside of Moore's law.


RE: Not a lot of details
By TomZ on 6/26/2007 1:14:17 PM , Rating: 1
quote:
There have been many articles listing alleged things iNtel has done. Seems like there's such an article every few months that I see, so they must be very much more numerous than that.

The OP talked about "crimes" - so far I haven't heard about any crimes. Everything I've seen are civil suits. Have you seen otherwise?


RE: Not a lot of details
By Oregonian2 on 6/26/2007 8:11:25 PM , Rating: 3
True in the sense that O.J. was subject to a civil suit for wrongful death of his former wife. The suit was civil, but the action he was accused of was murder. Call it what you will...


RE: Not a lot of details
By Phynaz on 6/25/2007 11:51:33 PM , Rating: 2
But crimes can only be decided in criminal court. There have been no criminal charges filed against Intel.

There have been accusations made by AMD in a civil matter.

Please take the time to understand the difference.


RE: Not a lot of details
By ZmaxDP on 6/25/2007 4:11:55 PM , Rating: 3
Think about it this way - why has AMD fallen down over this last year? Is it because their engineers suck as one person claims? If that is true, then I guess Intel hired all new engineers when it created the Pentium M and then transitioned those lessons learned to Conroe, it probably hired all new engineers again right? Wrong. I think part of the reason Intel is kicking AMD's butt is that AMD has not spent enough on R&D on its new processors. Why? Well, it can't spend nearly as much as Intel because it has a lot less money. Why do they have a lot less money? Because they have a small part of the market share. If AMD had 45% market share, they'd have a hell of a lot more resources to devote to R&D on their processor lines even if they maintained the same % of investment. Why does the current situation in terms of performance not matter much? Because inlike you personal bank account, financial decisions at large corporations take years to have a direct affect on the market. So, if K7 was hampered by Intel's monopolizing, and that prevented a 5% market share growth, that's a lot of money AMD didn't have for R&D and Manufacturing growth that it should have had. Perhaps if it got it, then we'd have seen Barcelona last year instead of this year (hopefully).

Then there is another issue - because of their limited capacity, AMD has alocated a lot of resources to growing manufacturing capacity, and in business an increase in investment in one area equals a decrease in investment in others. AMD had the performance crown for so long, and three years ago it didn't look like Intel would have anything competitive as Core2 turned out to be, so they invested heavily in their capacity to keep up with their market share growth. There is no doubt that part of AMD's problem is self inflicted. Decisions of where to invest are not something Intel can directly influence (or be blamed for). AMD has also invested heavily in ATI, which I still think is the right long term move. Hopefully that will prove itself out in the coming years.

Point being, though this talk of Hector's certainly had publicity, anyone that thinks this discussion is a short term finger pointing to distract from the relatively poor performance of AMD's processors is just missing the point. The level Hector is playing at is three years out. The battle he's trying to win here will have a major impact on the future of the industry in one of three ways. 1. He'll loose and Intel will keep squelching competition using means that aren't technically illegal, but aren't exactly legal either. 2. He'll win and AMD will receive a substantial settlement from Intel and be able to immediately invest the money internally where it is needed. It won't make up for the years of revenue and research lost, but it will bolster the books short term and allow some readjustment of priorities for their budget. 3. He'll win and these kind of practices will be banned, thus making the market behave a little more fairly for us consumers.

Now, in response to the comment: "I cannot possibly imagine how the current state of the processor market has hurt consumers... a $240 Athlon 6000? That's fantastic! Market pressures are killing AMD right now."

Considering that in a better market without Intel's monopoly we might have a Core2 competitor already out and thus an even lower priced Athlon6000, lower priced Core2's Intel rushing out their 45nm die shrink to compete ahead of schedule, and AMD readying their tape out for 45nm in response... I'd say your perception about the market not being hurt by Intel's practices are wrong. The entire point Hector is trying to make is that anti-competitive practices hurt in ways you'll never know. Sure things seem good now, but they could always be better - and these kind of market pressures from a company with such a strong market share majority are the kind of things that hold smaller companies back. Given, all this is obviously speculation. AMD could have screwed up just as badly without Intel putting on the pressure (the idiot engineer scenario). But, it is just as likely that AMD's slow time to market is a direct result of the monopoly pressure exerted by Intel over them. I'm pretty sure that Intel has been behaving inappropriately, and these kind of stumbles are exactly what that kind of pressure is meant to induce...

(Since disclaimers are popular at the moment, I own both Intel and AMD stock, and Intel and AMD computers.)


RE: Not a lot of details
By masher2 (blog) on 6/25/2007 4:21:33 PM , Rating: 4
When Ruiz says, "this is what it's like to compete against Intel", he's focusing on Intel's effects on AMD. But the mantra of antitrust law is that it exists to protect the consumer, not the competitors. AMD has still failed to demonstrate how Intel has hurt us, rather than them.

Your argument is that, had AMD gained more market share, it would have spent more on R&D, and possibly brought out a better chip. Maybe. But every dollar AMD takes from Intel is one less for Intel to spend. A larger AMD doesn't seem to imply that the combined R&D budget of both would be likely to increase.

In fact, history shows us just the opposite is true. Agressive antitrust action usually gives smaller firms at least a temporary guarantee of share, sales, and/or profits. With the monkey off their backs, those firms tend to compete less hard. They introduce fewer products, cut prices less agressively, etc. So while government action is certainly good for their bottom line, it hurts the consumer more than it helps them.


RE: Not a lot of details
By Goty on 6/25/2007 4:48:34 PM , Rating: 1
How have Intel's alleged anti-competitive practices hurt the consumer? How about a lack of choice?


RE: Not a lot of details
By TomZ on 6/25/2007 4:52:49 PM , Rating: 4
How do you figure you have a lack of choice? You have two big companies to choose from, and a small number of "fringe" companies doing x86. You also have such an array of current product offerings that it boggles the mind. Low power, high performance, single core, multi-core, enterprise, etc., etc. Lack of choice is hardly a problem.


RE: Not a lot of details
By Goty on 6/25/07, Rating: 0
RE: Not a lot of details
By masher2 (blog) on 6/25/2007 7:34:14 PM , Rating: 4
> but, lo and behold, there aren't any big companies out there carrying AMD processors?

You mean, besides HP, Lenovo, Acer, and NEC?


RE: Not a lot of details
By Goty on 6/25/2007 8:24:24 PM , Rating: 1
Alrigh, fine.

*many


RE: Not a lot of details
By TomZ on 6/25/2007 10:13:37 PM , Rating: 2
quote:
What's he supposed to do?

It's called "marketing," something AMD knows nothing about. In order to get Average Joe to choose an AMD processor over an Intel, he needs to see Superbowl commercials, pass by billboards on the way to work, see AMD product placements in movies (kidding on that one)... you get my point. AMD has to execute a marketing campaign to get AMD to be a household brand name.