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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 Targon on 8/6/2007 7:45:48 AM , Rating: 4
The difference is that you don't see McDonalds selling their products to restaurant chains so they are the majority of the supply chain. It's not just about being in a dominant position, it is being in a dominant position and then preventing people from going to the competition. In this example, it would be like McDonalds forcing restaurants to buy their beef from them, and if they dared to buy from somewhere else, supplies "might be delayed" to the point where the restaurants are afraid to buy from a third party.

That is the anti-competitive sorts of behavior Intel has been accused of doing, where there was a threat, or an encouragement not to buy from the competition, at risk of retaliation.

Now, AMD is not claiming that they should have gotten all of the "monopoly money" the report claims that Intel has gotten, but shows a motive for Intel to keep their monopoly position. $60 billion is a LOT of money, and if you figure that $20 billion has been gotten as a result of unfair business practices over the years that should have gone to their competitors, that's grounds for a fair amount of it to go to Intel's largest competitor if AMD wins the lawsuits.

A lot of elements are not intended to show that AMD should get all the money, but instead just add fuel to the fire when it comes to the legal battle. No matter how impartial judges may be, if there is continued news that shows that Intel has been accused of improper business practices around the world, it WILL add to a pattern of what Intel business practices are.

I do remember when Asus released their first K7 Slot A motherboards that the product was sent out in a plain white box with no fancy packaging of any kind(unlike their Intel motherboards). The general feel, based on comments posted from all over, is that Asus was afraid of losing supplies of chipsets if they hyped their AMD based motherboards as much as they hyped their Intel based motherboards. The K7M was an AMD chipset based board as I recall, one of the first from a big name in the industry to support the AMD Athlon. It was NOT common to find a motherboard to support the new AMD chips in those days. Keep in mind that before the Athlon, AMD processors would work in the same motherboards as an Intel processor since the socket type was the same. This meant that motherboard manufacturers did not need to worry about supporting chips from both manufacturers.


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