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An AMD-commissioned report claims Intel's practices hurt the industry on a massive scale

According to a recent AMD-commissioned study by research firm ERS Group, Intel gained approximately $80 billion USD in monopoly profits over the course of 11 years since 1996. ERS Group director Dr. Michael A. Williams, said that while gaining billions in profits is normal for a company of Intel's size, Intel gained an extra $60 billion by using anticompetitive business practices. Essentially, Dr. Williams' report claims that Intel overcharged for microprocessors and other related products.

Intel has been in a legal situation with the European Union for the last several years, being a prime target for antitrust investigations. Just recently, Intel disputed the EU's claims that its business practices negatively impacted the market and consumer spending. Intel claimed that many if not all complaints were directly from AMD and not customers at all. True enough, most of the complaints filed to the EU have been by AMD and companies that received subpoenas from AMD to release information.

"We are confident that the microprocessor market segment is functioning normally and that Intel's conduct has been lawful, pro-competitive, and beneficial to consumers," said Intel senior vice president and general counsel Bruce Sewell in a statement.

According Dr. Williams' report, Intel collected roughly $141.8 billion USD in profits from 1996 to 2006. The report subtracted normal competitive profits as well as economic profits and something called "assumed advantage profits" of 5%, leaving Intel with $60 billion in monopolistic profits. Despite assumptions using what the report called "standard economic methodologies," it is impossible to determine exactly just how much extra profit Intel gained from a monopoly.

"To be conservative, the study next provided Intel with a generous assumption that 5 percentage points ($28 billion) of its economic return were attributable to legitimate advantages. That left the $60 billion monopoly profit figure," indicated the report.

Assumptions aside, Intel has done very well over the last several years. Its price structure however has not changed drastically -- flagship processors always carry a big premium while lower models always give the better value. Intel's halo processors typically carry a price tag of roughly $1,000 at retail; Intel value processors occasionally fill a sub-$60 price point.

An area outside of the legal system where AMD constantly competes with Intel is in prices. Over the last two years, the price war between AMD and Intel has been nothing less than beneficial to the consumer. AMD recently cut prices on its multi-core processors, giving another shot in the arm to Intel. In this back and forth price cutting, AMD essentially reduces its potential profits. Intel traditionally competes by using heavy marketing campaigns that run on a global scale, but AMD's marketing strategy heavily focuses on the U.S. market -- a small percentage of the overall global market.


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RE: AMD IS crying in Vain
By wordsworm on 8/6/2007 12:50:04 AM , Rating: 2
AMD's ability to grow is/was hampered by lack of manufacturing ability. I'm in S. Korea atm, and I can tell you AMD is well represented in this market. The people who build computers and sell them are the most important audience in reality. That's not to say that they're not affected by the ads. AMDs processors are not slow. They are quite good in fact.

I read recently that AMDs market share has actually increased last month. I wish I'd kept the link to the article. In any case, I do believe that AMD will win 5-10B in their lawsuit. With that money, surely they'll be able to continue with their practice of creating great processors.

AMD can't focus on every country, because they don't have the ad resources, and they're still working on increasing production.

Anyways, as everyone knows, AMD is needed, and that's why I buy their products. I don't need the fastest CPU to play the best games. I just need a good Athlon processor and an 8800GTS, and I seem to do quite fine.


RE: AMD IS crying in Vain
By Master Kenobi (blog) on 8/6/2007 9:49:46 AM , Rating: 3
Clearly you don't represent the majority of the consumer market. Consumers will purchase the most they can get for their dollar. Intel currently holds this title in most of the pricing brackets and is the reason they are beating AMD senseless. AMD global marketshare is on a sharp decline and that isn't likely to change anytime soon.

AMD has several major problems and I will list them for you.
#1- AMD's marketing team has sucked since Day 1. Remember the Intel jungle? The Blue Man group commercials? Exactly. What was AMD's trademark jingle? Or what marketing tactic did they hang their hat on? Exactly. None. Nadda. AMD's marketing never was to the consumer, it was always to OEM's. Maybe someday AMD will fire their marketing department and get a real marketing team, until then they are in for a tough climb.

#2- AMD was and still is at the peak of their production. Want to know why DELL just started going with AMD? Because most of the other OEM's cut back, and because DELL knows AMD is trying to move a surplus stock of processors. AMD was in a bad position and DELL was able to strike a deal with AMD on favorable terms for a substantial amount of AMD processors. Now DELL was able to get a sweet price deal, and a guarantee that AMD must deliver Dell with a specific quantity of processors or face consequences. AMD is happy because these are guaranteed processors sold each quarter to Dell, and Dell is happy because they have a line of cheap processors to make some very very cheap line of desktops for the joe blow users of the world.

#3- AMD lucked out with the athlon line. The Athlon processor was actually the first AMD processor designed in house, all others were just Intel knockoff's with a few tweaks.

#4- AMD is currently unable to expand any further than it already has. Contrary to what AMD might want you to believe, it is not capable of absorbing more market share. It simply can not make more chips faster than it already is.

#5- AMD need some nre management, and frankly the best thing they could do is declare bankruptcy and let someone either purchase them and fire the top level management, or let a private investment firm buy them out and fire the top level management. Either way, Hector and pal's need to go. They suck and they don't know how to market their company effectively.

Anyways, enough ranting.


RE: AMD IS crying in Vain
By emboss on 8/6/2007 8:43:04 PM , Rating: 2
Just one correction ...

quote:
The Athlon processor was actually the first AMD processor designed in house, all others were just Intel knockoff's with a few tweaks.


AMD's last direct Intel clone was the 386, though the 486 was more or less a derivation from the 386, and the 5x86 was an enhanced 486. After this, there was the K5, which was a ground-up AMD in-house design. Admittedly, it sucked, but it was entirely AMD's design. Although the K6's weren't entirely AMD's design (they bought NexGen and used their core as a base) they could hardly be described as Intel knockoffs.


"Well, we didn't have anyone in line that got shot waiting for our system." -- Nintendo of America Vice President Perrin Kaplan














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