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AMD vs. Intel: "It's not a slam dunk case"

By - Source: Tom's Hardware US | B 14 comments

Austin (TX) - AMD has begun rallying support for the most important legal battle in the firm's history. Market experts already are divided in two camps - one that believes AMD had no other tool left to protect itself and another one that argues AMD is simply unable to compete. But both sides agree that it won't be easy for AMD to build and prove its case.

There is no question that AMD' antitrust complaint against Intel is launching a critical phase for AMD that will heavily influence the environment of the future microprocessor landscape. It will stir emotions among users, create media frenzy and give system builders a reason to take another close look at the products they are using for their products.

The big question is, whether AMD will be able to prove its claims. These claims, essentially accusing Intel of using unfair practices to maintain and extend its monopoly in the microprocessor business, are not new. They have been around for as long as the two firms compete. For example, the fact that Dell is not selling AMD is an old story and has been discussed for quite some time and has been rumored to have some sort of fishy background. Also, Sony, Toshiba and NEC were either forced to stop using AMD' chips or were "encouraged" to cap the number of their AMD-based products.

The problem of all of this however is that AMD has no smoking gun, but rather information it apparently received largely in talks with customers. "Right now, these are conversations in the wind," said Carmi Levy, an analyst with Info-Tech Research. At this time it is not even clear, which of those customers are willing to take the stand and testify against Intel and potentially jeopardize its own business, provided AMD's allegations are true.

Rob Enderle, principal analyst of the Enderle Group, believes that "AMD will not have trouble finding anyone to testify", but stated that such people may me mainly retired executives or management staff that has left affected system builders since. "OEM's have been complaining for years about Intel's behavior," Enderle said, "but current executives are likely not to be very happy to take the stand and put their career on the line." Krevin Krewell, Editor in Chief of the Microprocessor report, agreed: "Clients do not want to go out of their way in such a scenario. Retired executives have more freedom to comment on this matter."

It will be interesting to see which clients AMD will be able to convince - also through subpoenas - to talk about possible anti-competitive behavior. Such firms could include Transmeta, whose executives are likely to have fun exposing Intel, but at the same time are in a close partnership with Sony, a company that is very unlikely to testify voluntarily.

Enderle and Krewell mentioned that AMD indeed may have a case, since it has done well in developing a strong product line and "did not miss on executing" its strategy. "At least there is evidence of an observation that there is something that keeps AMD from growing larger," Krewell said. In fact, AMD singled out Intel as the only reason and in the end "did not have a choice other than filing this suit, since they are locked out of large parts of the market," Enderle said.

Levy, on the other side, does not believe that Intel has engaged in unfair practices, but simply competes in a more efficient way. "When Intel gets its act together, everyone else scatters," he said. "AMD is now in a three-year-string of reduced market share, about 16 percent in 2004, and it would not be the first time when a company would use such a suit to improve its market position", indicating that AMD may be more after a publicity stunt to gain market share. Also, since the market shared tumbled, "it is simply in the interest of share holders" to launch such an action against Intel, Levy said.

Another question in this case is also why federal agencies have not attacked Intel, if the company has engaged in anti-competitive behavior for such a long time. AMD said in a conference call that it is approaching authorities around the world and hopes that actions will be taken against Intel. For now, the Department of Justice as well as the Federal Trade Commission, however, told Tom's Hardware Guide that it cannot confirm any ongoing or planned antitrust investigations targeted at Intel.

According to AMD, the reason for the complaint is neither based on an antitrust investigation against Intel nor on a cross-licensing agreement that recently was renewed and allows both companies to freely design their products. Instead, it appears that AMD is very confident about its case after the Japanese government found that Intel had engaged in anti-competitive behavior in Japan and teh company decided not to contest those charges. Additionally, AMD believes that it can use its strong product line as lever in case: "Anything that could indicate that we are a failing company is off the table, Thomas McCoy, AMD's executive vice president for legal affairs and chief administrative officer, said.

However, there is the danger that the public could perceive the filing as a huge gamble and matter of desperation, as AMD has been trying for many years to climb above 20 percent market share without any success.

As of today, AMD's case has several weak points the company will have to address. Especially the claim that Intel's behavior harmed consumer interests and eliminated choice appears to be standing on thin ice. Just with the introduction of the latest desktop processors AMD demonstrated what it will do when the company faces little or no competition: Raise processor prices in even higher ranges than Intel did. If consumer benefit equals product pricing, then AMD has quite some homework to do.

"It is just not a slam dunk case for AMD", Levy summarized the data that has been made available by AMD so far.

Intel reacted to the accusations with a standard statement. "We strongly disagree with AMD's complaints about the business practices of Intel and Intel's customers. Intel believes in competing fairly and believes consumers are benefiting from this vigorous competition." However, the company went on and responded to AMD's attacks: "AMD has chosen, once again, to complain to a court about Intel's success, with a legal case full of excuses and speculation," a spokesperson said.

AMD did not respond in more detail to the claim of "speculations", however, a spokesperson admitted that the current complaint is based solely on conversations AMD's staff had with clients. AMD declined to comment on which firms could take sides for AMD in the court case, which could begin at the end of 2006: "It is way too early to discuss our court strategy," the spokesperson said.

Related stories:
AMD goes to war - files antitrust suit against Intel

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  • 0 Hide
    xaira , August 3, 2009 1:42 AM
    dont worry amd, u win and intel gets fined a hole heep a money
  • 0 Hide
    xaira , August 3, 2009 1:43 AM
    but
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    xaira , August 3, 2009 1:43 AM
    if
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    xaira , August 3, 2009 1:43 AM
    amd
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    xaira , August 3, 2009 1:43 AM
    had
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    xaira , August 3, 2009 1:44 AM
    intel's
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    xaira , August 3, 2009 1:44 AM
    resources
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    xaira , August 3, 2009 1:44 AM
    would
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    xaira , August 3, 2009 1:45 AM
    it
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    xaira , August 3, 2009 1:45 AM
    be
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    xaira , August 3, 2009 1:45 AM
    a
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    xaira , August 3, 2009 1:45 AM
    different
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    xaira , August 3, 2009 1:46 AM
    story
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    xaira , August 3, 2009 1:46 AM
    ?