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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: Is it just me...
By sc3252 on 8/6/2007 12:56:17 AM , Rating: 3
I had no clue AMD was out selling Intel in the retail space with the k6's and k7's. Enlighten me with some actual numbers, then just some blanket statements.

Even if AMD was outselling Intel in the retail space during the so called glory days of the k8 it only encompasses retail! Intel was still out selling them, even when they(AMD) had a much better and effiecent chip. I wouldnt call 17% during the *glory days* a great number.

RE: Is it just me...
By Viditor on 8/6/2007 2:43:59 AM , Rating: 1
I had no clue AMD was out selling Intel in the retail space with the k6's and k7's

That's actually the retail market only in the US (which also doesn't include the largest segments...).

RE: Is it just me...
By zsdersw on 8/6/2007 6:25:46 AM , Rating: 2
AMD sold every chip it could make. You can't grow marketshare if you're just meeting demand.

RE: Is it just me...
By masher2 on 8/6/2007 10:18:02 AM , Rating: 2
> "Even if AMD was outselling Intel in the retail space during the so called glory days of the k8 it only encompasses retail! ...I wouldnt call 17% during the *glory days* a great number"

AMD's market share hit 21.4% at the end of 2005, dipped after that, and now today, stands even higher, at 22.9%.

That is an excellent number, given AMD's extremely poor numbers in the 2002-2004 period. The fact is, the company gained market share extremely fast with the K8.

"Spreading the rumors, it's very easy because the people who write about Apple want that story, and you can claim its credible because you spoke to someone at Apple." -- Investment guru Jim Cramer

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