Ability to Choose

By Jeffrey Burt  |  Posted 2005-06-28 Print this article Print

AMDs suit says specifically that Intel used its position—including its ability to offer product rebates or to dole out funds—to influence PC makers to limit their purchases of AMD chips, and therefore to limit consumers ability to choose between different types of products. The suit identifies 38 companies, including Hewlett-Packard and Dell, which it says Intel has pressured in one way or another. It says, for example, that Intel put pressure on HP to limit its use of AMD chips and that it pressured Dell, which does not use AMD chips, not to start selling AMD systems. Representatives at Dell and HP declined to comment on the companies role in the suit.
The U.S. Department of Justices antitrust suit against Microsoft Corp. has shown that it can be difficult to prove antitrust violations, Sterling said. The courts ultimately ruled that Microsoft, despite its dominance, still was subject to competitive pressures.
Thus, "if Microsoft faces these types of pressures in their dominated market, arguably Intel does as well," Sterling said. AMD might even face resistance from those it says its trying to help, limiting its evidence-gathering capability. Although it had enough information to file suit, AMD will seek more details from PC makers and others potentially involved in the case. In a pretrial discovery phase, which started Tuesday, AMD will ask for documents and e-mails and later testimony that might support its case. Thus AMD faces the challenge of getting executives at PC makers to say they would have liked to have gone with processors other than Intels, but that they were pressured or prevented from doing so. It could prove difficult to get Intels customers to speak poorly of it. "That doesnt appear to hold water under the reality microscope," Sterling said. "Microsoft has plenty of customers, companies and others to testify of abusive conduct, [but] Intel hasnt made as many enemies in numbers or vigor." Click here to read about AMDs early quad-core plans. The key will be smaller PC makers, which are most likely to testify that they were strong-armed by Intel. Larger manufacturers might say it made sense to deal with Intel in order to get discounts, said Roger Kay, an analyst at IDC. "Its hard to characterize Dell as a shrinking violet, cowering in the corner as Intel stomps around and imposes their will," Kay said. "It just doesnt sound like the Kevin Rollins I know." Intel said in a statement that it strongly disagrees with AMDs complaints. However, it will "respond appropriately to AMDs latest complaints and is committed to successfully resolving these issues in court," the statement said. Still, a successful legal campaign by AMD might ultimately change the PC market in some unexpected ways. For one, it could draw interest from antitrust agencies in the United States and elsewhere. Intel has long set the pace of the PC industry. But a successful court battle could also lead to greater AMD influence the industrys future. AMD, which also alleges in the suit that Intel sought to exclude it from standards-setting bodies for PC components, might exert more influence on the technological directions taken by the PC industry, if it wins the case. A win also might make it easier for others to enter the PC processor space. Right now, the only other company selling a significant numbers of x86 chips is VIA Technologies Inc. AMD would welcome the additional competition, said Tom McCoy, AMDs executive vice president of legal affairs. But even if it AMD should win in court, dont count Intel out as a competitor, McCarron said. Even if it were to discontinue some practices, such as giving out rebates or co-marketing funds, Intel still could use product pricing or chip bundles, such as its Centrino package for wireless notebooks, to its advantage, he said. "Theres no question if you buy something together, you get a better price," he said. "Nobodys established that as unfair."


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