Otellini questions EU logic
'No consumers harmed'
In hitting Intel with a record 1.06 billion euro fine, EU Competition Commissioner Neelie Kroes argued that the company has "used illegal anticompetitive practices to exclude its only competitor and reduce consumers’ choice." Speaking at a press conference in Brussels, she said "the whole story is about the consumer."
But Intel CEO Paul Otellini doesn't see the logic. "[Commissioner Kroes] spoke about harm to consumers," Otellini told reporters during a conference call this morning. "It's hard to imagine how consumers were harmed in an industry which has lowered the cost of computing by a factor of 100 during the term of this case, and at the same time that happened, AMD claims it's more vibrant than ever. So I don't see consumer harm or competitor harm happening here."
Well, AMD certainly believes it's been harmed. "Today’s ruling is an important step toward establishing a truly competitive market," reads today's canned statement from AMD president and CEO Dirk Meyer. "AMD has consistently been a technology innovation leader and we are looking forward to the move from a world in which Intel ruled, to one which is ruled by customers."
And it sees the EU's ruling as delivering consumers from Intel price inflation. "After an exhaustive investigation, the EU came to one conclusion – Intel broke the law and consumers were hurt," said Tom McCoy, AMD executive vice president for legal affairs. "With this ruling, the industry will benefit from an end to Intel’s monopoly-inflated pricing and European consumers will enjoy greater choice, value and innovation."
In a statement released earlier today, Otellini and Intel said that the EU "ignored or refused to obtain significant evidence that contradicts the assertions in [the commission's] decision." Asked to describe this evidence, the Intel boss said it involved statements from OEM partners as well as information from AMD itself.
"There were a number of documents from the OEMs - or between Intel and the OEMs involved in the allegations - that refuted what was claimed here. In some cases, the OEMs made statements that in fact that there were not exclusive deals and they were not under conditional terms and those documents were not allowed into the case file or not properly used by the case team in making their determination."
Many of these documents, he said, were turned up as part of the discovery process in AMD's ongoing US anti-trust lawsuit against Intel. The Register's publisher - along with The New York Times, Washington Post, and Dow Jones & Co. - has filed a motion telling a Delaware court that certain records in the case were being unnecessarily sealed.
Intel has said it will appeal the EU's decision, though Otellini said the company has yet to see the commission's 500-plus-page ruling. Intel - Otellini reiterated time and again - has merely received a two and a half page summary.
While an appeal is pending, Intel must adhere to certain remedies laid down by the EU, but Otellini said the company is still unclear on what those remedies are.
Kroes did order Intel to stop offering rebates that required OEMs to purchase fewer chips - or no chips - from competitors. But Otellini said this would be "easy" to comply with. "We don't do that to begin with," he said. "There's no change there."
Otellini was adamant that the neither the EU's ruling nor the company's other legal woes would affect the cost of end-user PCs. "Prices will continue to go down," he said. "Quality goes up. Performance goes up. There's nothing in this ruling that reverses Moore's Law."
And he doesn't see any change in the way Intel and AMD compete for business or the way OEMs make their buying decisions. "It's hard to imagine the dynamics of competition would change. Most customers buy from both suppliers today. Most customers buy more or less from each supplier depending on the quality of the products, the competitiveness of the products, and the pricing. That dynamic hasn't changed in my career at Intel, which is 35 years, and I don't expect it to change.
"I don't think a customer is going to put him or herself at a disadvantage by buying inferior or more costly products."
But again, he said that Intel is still in the dark over what's inside the EU's 500-page ruling. He indicated that the ruling could potentially change the way its European sales and marketing staff operate, but he said Intel has no intention of altering its European investments. Intel's Ireland-based manufacturing plant is its fourth largest.
Defiant to the last, Otellini argued that the EU's investigation was sparked solely by a complaint from AMD, saying that to his knowledge no customer had joined the complaint. When asked whether customers would fear reprisals if they joined, he called the notion "absurd."
"It's absurd to think we would not sell product to someone who happened to not like a particular comment or term or whatever it is. It's a very competitive business. Our customers are in most cases larger than Intel. Our customers have incredible buying power and are excellent negotiators." ®
This isn't about AMD or Intel's current technology, or pace of technology, or the current price/performance or anything like that. What this is is very simple:
Intel, being in a monopoly position has the ability to lean on customers, spread FUD, hand out "incentives" and "samples," and generally do things that are considered as "good business practices" when you are not a monopoly. (I.E. they are a well accepted and understood pack of business practises designed to promote your organisation, and screw your competition.) These practices are VERY common in IT, as the ball swings between those who have something cool and innovative, and those who are selling yesterdays crap.
Now, and I know this is where you all get lost, these business practices are illegal if you are a monopoly. Why? Because capitalism is (supposed to be) something that provides the best possible advantages to everyone via the magic fairy dust of competition. If, as the 800lb gorilla amongst the mice, and you use your position to step on as many mice as you can, you're generally regarded as stifling rather than encouraging competition. You may not like it, you may disagree with it, but that is the law as it stands today.
Intel did this; full stop. When AMD finally had a good product, rather than answering with a good product, they stepped on AMD over and over again until they could bring the great machine of their company into play and truly answer them technologically. In a competitive environment, (and without Hector Ruiz,) AMD should have been able to make huge inroads into market share, buy/build more fabs, ramp up production, sink loads of cash into R&D and actually meet Intel toe to toe for decades to come. Yes fanbois, regardless of how much you love Intel, that was how far ahead AMD was at the time all these various anti-trust investigations started.
In the meantime and betweentime, Intel shart all over AMD, which caused them to devote an abnormal amount of their resources just to getting places like Dell to buy their chips. Not an objective soul can honestly say Dell was all Intel because there was no demand. HP ran roughshod over them for years because they didn't shift AMD kit, customers screamed up and at them to sell them AMD kit of all flavours, and Dell (amongst, I have to admit, quite a few others,) only did so when Intel said "okay, we've finally got a price/performance answer to AMD, sell whatever you want." (The fact that various lawsuits were now out against Intel, investigating this very thing might also have played into this.)
Add in the "freebies" and "promotional items" which meant that ON THE WHOLE, company X got Y units for below the cost of production. (Thus undercutting AMD severly, who didn't have the resources to use loss leaders like that.)
So, in short, the point is that a way back when, the 800lb Intel gorilla stepped on the AMD mouse. In doing so, they prevented AMD from capitalising on the excellent work they had done in advancing technology, and thus hampering their ability to truly pump more money into R&D, thus really cutting into their ability to be competitive in the medium and long term. This then meant that Intel had ensured that as soon as they finally caught up to AMD there would be no possible way AMD could pull ahead again.
That ladies and gentlemen, is how the consumer was hurt by this business. Intel used tactics that are illegal to use as a monopoly to directly harm AMD's long term chances of being able to pump adequate money into R&D, and thus it's ability to be a medium or long term competitor. Does Nehalem walk all over Shanghai? Yes. Why? Because Intel spend billions making sure that it would.
On a personal note, I would not honestly be shocked if Intel spent more money per year stepping on AMD than AMD actually had in REVENUE. You honestly have to bear in mind the difference in size of these companies. AMD is not the slightly smaller plucky underdog. AMD is vastly, VASTLY smaller than Intel, and exist only because Intel lets them continue to do so. You can bet that every year at Intel, there is a meeting between people much more intelligent and worldly than I where the question is asked: "do we make more money by allowing AMD to continue to exist, or do we wipe them out for good, and just eat the anti-trust lawsuits?"
So please try to expand your minds beyond "AMD chips are not as good as Intel’s, thus this is all bollocks because who would buy AMD?!?!?!?!?oneoneone!!111!1oneone." Think about WHY AMD is so far behind, when they were, not that long ago, dramatically ahead.
Thank you, and good night.
Please follow up your post including details of said lower power consumption, less heat generation, etc, etc, blah, blah, blah. Clearly you don't know nuffin.
Intel kit only gained the high ground again with the Core 2 Duo and Core 2 Quad chip-sets, a fairly recent addition to the line-up.
When the case first started, almost all power users were switching allegiance to AMD and the Athlon 64 line-up of chips, the first to introduce a 64-bit architecture on an x86 based chip.
Intel later included the 64-bit instruction set as EM64T (or something like that).
The first multi-core chips from AMD eclipsed the Pentium D that Intel were pushing, both in performance and in power consumption.
Today, for most people, Intel chips are the way to go, except in high-end maths based servers, were the better floating-point unit in AMD chips comes in handy, hence a lot of meteriological etc type server farms are actually AMD based.
Eastern Quantum Communications Feeds ...... Source XSSXXXX Streams
"It's a very competitive business. Our customers are in most cases larger than Intel. Our customers have incredible buying power and are excellent negotiators." ...... The Global Foundries Right Royal Desert Song Voice? Bellissimo!
A Virtually Controlling Intelligence Coup. Bravo Camp Allah.
Re: To be fair...
And then there was that whole thing wherein Intel was the first to roll out 64-bit x86 chips, and pumped out newer, faster designs while AMD was playing violin on the deck of the Itanic and peddling inferior Pentium 4 chips for more than they were worth.
Oops! Sorry, let me open up vim and do a little search and replace...