Report: Intel Reaped $60 Billion in Monopoly Profits
August 5, 2007 3:18 PM
comment(s) - last by
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.
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.
This article is over a month old, voting and posting comments is disabled
RE: Is it just me...
8/7/2007 2:44:33 AM
It's been a while since I read the Complaint; my memory was hazy. Actually, it's worse than either one of us described. Intel was giving a
so the OEMs would have to buy 90% Intel to get any discount at all.
The result was that AMD had to sell their processors at a much lower price to get any business at all.
It's described on pages 22-26
"If you mod me down, I will become more insightful than you can possibly imagine." -- Slashdot
Intel Responds to EU Charges
July 28, 2007, 12:03 AM
AMD to Can Single-core, Cut Dual-core Prices on Monday
July 7, 2007, 2:06 AM
E.U. Pushes to Charge Intel with Illegal Business Practices
January 17, 2007, 6:41 AM
Google's Gleaming Glass HQ Gets Mountain View Snub, LinkedIn Gets the Love
May 7, 2015, 6:58 AM
Tech's Tax Day Fortunate Few: Qualcomm, Xerox, GE, et al. Pay Little or No Taxes
April 15, 2015, 11:30 AM
LinkNYC Terminals to Blanket New York City With Free WiFi, Free Calls, and Ads
November 17, 2014, 6:50 PM
Microsoft is Open-Sourcing Most of .NET, Adding OS X and Linux Support
November 12, 2014, 8:27 PM
Home Depot Lost 53 Million Emails, Blames Windows, Buys Execs New Macs
November 9, 2014, 5:00 PM
Former NSA Lawyer: If Google, Apple Encrypt User Data, They’ll Wither on the Vine Like Blackberry
November 6, 2014, 12:15 PM
Most Popular Articles
First Apple Computer Auctions for $815,000
August 27, 2016, 7:51 AM
Drones at the Airport
August 26, 2016, 5:00 AM
5 Easy Ways to Lower Blood Pressure By Monique C. Bethell, Ph.D.
August 25, 2016, 8:00 AM
2 NEW PlayStation 4 Models - Unveiling September 7th
August 23, 2016, 6:23 AM
Say Goodbye to Data Plans - Sprint and T-Mobile offer Unlimited Data
August 22, 2016, 6:12 AM
Latest Blog Posts
First Self-Driving Car debut on the streets of Singapore
Aug 28, 2016, 4:10 PM
Coming Soon - Drones and Airports
Aug 24, 2016, 12:40 PM
SolarCity’s Gigafactory: A Milesone in Emerging Technology by Lily Emamian - 15 August 2016
Aug 15, 2016, 6:30 AM
Sceptre Airs 27", 120 Hz. 1080p Monitor/HDTV w/ 5 ms Response Time for $220
Dec 3, 2014, 10:32 PM
Costco Gives Employees Thanksgiving Off; Wal-Mart Leads "Black Thursday" Charge
Oct 29, 2014, 9:57 PM
More Blog Posts
Copyright 2016 DailyTech LLC. -
Terms, Conditions & Privacy Information