A Letter to Hector Ruiz
June 25, 2007 6:14 PM
comment(s) - last by
Dear Mr. Hector Ruiz,
After I heard your speech at the
American Antitrust Institute in Washington, D.C.
, I couldn’t believe my ears so I had to write this down. First of all, I agree that you have some valid complaints about Intel. However, you and your lawyers took it way too far. You’re making it look like Intel is forcing others not to sell your products by placing military troops at your door; which is not true.
You claimed that Intel is a monopolist and Microsoft isn’t. As far as we know, Intel is not forcing software developers to write software and games that will work only on Intel’s hardware. But ... Microsoft is taking related actions toward Apple for example, so Intel and Microsoft do not appear to be in the same ‘Monopolist abuser’ league.
I really think you guys took it too far with that Intel U.S. Antitrust case. Yes, Intel is big and uses certain pressure tactics which some may break the U.S. laws; but you can’t blame them for everything. It takes two to Tango, and Intel cannot dance alone. You’re dancing with them instead of working on making better products for AMD consumers. It appears that you want to spend money on lawyers and ridiculous antitrust laws which will likely lead you nowhere.
The important thing in competition is you need to work hard to increase your companies chances of winning. If you’re sitting down and whining about your competitor, it will get you nowhere. Don’t get me wrong, I’m not here to make fun of you nor AMD. I’m here to try to help you, despite the aggressive criticism.
Instead of dedicating your time and your money to this case, concentrate on working hard to provide better products. Let’s take a look at the latest R600; we all had very high expectations about it yet after reading results, I burst into tears. Personally, I like ATI/AMD, (
especially after NVIDIA tried to sue me
) but I must admit that the R600 simply doesn't cut it when compared to the 8800 series from NVIDIA. You can probably cook eggs on it due to its high temperatures (And maybe Barbeque), and the performance is a joke. Perhaps a lower pricing point instead of where it currently sits, which is too close to the GeForce 8800 GTS. Also reports that you need a small nuclear power plant to run it in Crossfire, does nothing to entice the high end users to dig into the wallet.
Take a look at your processors line - which is not bad at all. But again, there is such a mess in naminig the SKUs that like the majority of others I’m too confused. I’m a member of the press, I do receive information time to time, and I still don’t understand what the hell is going on. If the press dont get enough insight about your current product line let alone upcoming products, how the hell would the consumers know? Every two weeks I’m getting new information but I turn around and see some new products in the shop that you guys never told us about. Even though, when it comes to processors, you’re not too far behind to still offer Intel competition.
Here is my take on what your problem is!
Your marketing simply doesn't exist, and you think the world market rotates strictly around the United States. The world is not based just on the United States or OEM's like Dell. Stop using your time and resources on these antitrust lawsuits inside the United States, and all these system builders/suppliers. There is a big world outside of the U.S.! There are 6,555,000,000 people on earth, and only 300 million of them live in the United States of America.
Your real problem is that you failed making AMD and the Athlon into famous brands. For example, if I travel to Africa and ask someone on the street: ‘Where can I find McDonalds?’ chances are they could give me exact directions. And in McDonalds’s, if I ask for Coca-Cola and a Big Mac, they will have it for sure. Why? Because these are known brands as well. After I ate, I want to buy new shoes, and as you know already, everyone knows Nike. Do you get my point? If I ask someone about Intel or Pentium, they will probably know what I’m talking about; because these are known brands as well.
Do you know why? Because you guys never advertise! You’re not dedicating enough resources, efforts or time in other countries. Intel is out there making deals with governments and advertising on TV nonstop. How do you expect people to hear about you and your products? I have never seen an AMD ad in my country, unlike Intel’s.
Let’s admit it, most home users only use PCs for basic needs. Not everyone is experienced like us. If you ask a newbie, ‘Which processor do you want? AMD or Intel?’ They would say Intel. Why? because that’s the only processor, they have heard of. No one will buy your products if you’re not advertising and letting them know.
Just for your information, a few years ago when I worked in a hardware shop here in Israel, we had a lot trouble getting AMD products in our country, basically due to the lack of worldwide distribution lines, that again shows us weakness with your marketing and international support.
So how do you break a monopoly? Not by these lawsuits in the U.S., but by increasing the demand for AMD products. If you start working in more countries, placing advertisements in the media, open new marketing offices, you will get far more recognition. If some retailer is working only with Intel, after many user requests, they will have no choice but offers your products as well.
Every business wants to generate income with minimum costs. Every business wants to make high sales, but if 30% of their customers are demanding AMD’s products, they will have to provide it, or lose a lot of money and customers. Instead of whining about monopolies, how about you start to work on creating demand?
How much money has AMD spent on litigation since 1997?
Let the public know about your current and upcoming products. Work close with the press so they will like you, put ads in newspapers and TV stations to attract basic users; and focus on making better products. Focus on making AMD into a known brand like Coca-Cola everywhere! Not only in the United States.
As I said, You need to increase the demand, and only then will you see Intel’s empire falling down - even without U.S. Antitrust lawsuits. So please instead of crying and whining to Uncle Sam about Intel’s illegal behavior, work to fix your flaws and offer us some real competition. Don’t blame Intel for monopolist behavior; blame yourself for letting them do that, and for failing to offer international competition like you should.
Don’t forget that we are the consumers, we buy your products, we decide which processor to buy. All you need to do is to convince us/shops to pick your product, and if you’re failing to do so, you’re pushing them into Intel’s nasty hands.
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RE: Well said
6/26/2007 7:35:50 PM
I think the point you are missing is that one of the reasons for the mis-steps is the influence of Intel.
Let me try and explain. If you produce a product and it is superior to mine, but I have a lot of clout/money/what have you, and I manage to retain a lot of business while still utilizing my position of dominance to invest in more R&D to better my lineup in the future, you are stuck with gaining minimal market share.
You will continue spending a lot of money to develop products but no matter what you spend, I can easily outspend you and offer vendor incentives to stick to my product. Doesn't matter if you have a better product.
You, therefore, have a lower net revenue stream coming in than might be expected for someone who has the dominant part on the market. You fight back the next best way by dropping prices to increase demand and, in the short-term, this is successful in netting some more percentage points.
However, you lose margin (i.e. profits) and go into debt to stay competitive.
In the meantime, I can allow a portion of my cash mountain to dwindle as I also cut prices. For the heck of it, I might just start a price-cutting war because I can afford to.
you have less "profit" coming in and it makes it harder for you to invest in R&D.
Now, even if AMD had the better product coming to market and did so for 3 or 4 successive cycles, it neither has the capacity in its FAB's, not the financial might to overtake Intel. It will, at best, be able to garner 25-35% at it's peak before Intel strikes back.
While AMD has invested heavily in superior marchitecture, Intel has had the luxury of creating a better product while simultaneously developing lower TDP tech. Combine the two and you have a winning combination. AMD doesn't have the luxury of doing the same.
Into this scenario, if you put in more competitive practices and prevent monopolistic ploys, you will see much more even revenue streams, more money available for R&D and, perhaps, shorter time to market for new products.
What Ruiz is saying, when you look @ the gist of it and remove the emotional content, has a sound economic basis. One thing leads to another and so forth, essentially a domino effect that is pushing AMD further and further out of the market, unless it can fix it's issues with the Barcelona based procs and get out there and compete solidly.
RE: Well said
6/26/2007 8:21:01 PM
I understand and agree with what you are saying, but the point I'm trying to make is that you have to figure out if any part of that is really due to Intel operating illegally. Since I haven't seen any evidence yet of Intel wrongdoing, I am more likely to attribute the cycle that you described to other issues, like not investing early enough in fab capacity, a complete lack of marketing, failure to develop great chipsets w/integrated video, decision to acquire ATI at that point in time, decision to initiate a price war with Intel, etc. Major mistakes that have costed AMD big-time. I see sufficient mistakes here to explain AMD's performance without trying to shift the blame to Intel.
RE: Well said
6/27/2007 12:06:58 AM
This is denial. WHen AMD has a superior product athlon against Intel P4, AMD gains market share, why they didn't complain then. When C2D beats Athlon, AMD loses market share. That is simple. Everything else is denial.
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