AMD Sees Upside in Court Battle Against Intel

It'll be a long fight for AMD, but the company thinks it can win better access to the PC market in its antitrust lawsuit against Intel.

Advanced Micro Devices, which filed an antitrust lawsuit against Intel on Tuesday, envisions a day when Intel no longer dominates the PC market.

AMDs suit, filed in Delaware, alleges that its larger rival wielded its financial and market clout illegally in order to artificially limit AMDs market share and maintain its own PC processor monopoly. Advanced Micro Devices Inc. also seeks restitution, but declined to offer specifics. Intel Corp., in a statement, denied any wrongdoing.

The suit, which could take a minimum of 18 months to come to trial, isnt likely to effect any immediate changes. But freeing AMD of what it says are measures Intel takes to protect its monopoly could make the PC market more diverse and help lower the cost of PCs, AMD said.

/zimages/5/28571.gifRead more here about AMDs suit against Intel.

As part of what is shaping up to be a long legal battle, AMD aims to present enough evidence—not the least of which will be testimony by PC makers—to persuade the courts to rule against Intel, creating a new environment in which the two companies compete more directly. AMD thinks that environment will foster more competition and lead to PC makers freely choosing the best processor at the best price for a given system.

The changes, AMD believes, would result in far more AMD-based PCs and open opportunities, such as a possible AMD-Dell Inc. deal. AMD also would be able to use its newfound agility to compete on price and technical terms to earn more wins in business-oriented notebooks, desktops and servers from large, brand-name companies, AMD executives said. Right now, of the largest PC makers in the United States, only Hewlett-Packard Co. offers AMD-based systems to businesses. Dell, Lenovo Group Ltd. and even Gateway Inc. use only Intel in their business systems.

"We deserve to have a significantly larger share of the market than new already have. The only thing thats keeping us from achieving those numbers are the illegal, monopolistic actions of our competitor," Hector Ruiz, AMDs CEO, said in a teleconference with analysts and reporters Tuesday afternoon.

AMD garnered 16.9 percent of the PC processor market in the first quarter of 2005, versus Intels 81.7 percent, figures from Mercury Research Inc. show. Historically, AMD has had less than 20 percent of the market, while Intel has had about 80 percent of PC processors shipments.

"This will obviously be a very long, running battle between the two companies," said Dean McCarron, principal analyst at Mercury Research. "However, if the allegations are true, obviously that could influence [AMDs future] market share."

AMD bears the burden of proof, however. A company must use its dominant position to maintain a monopoly before it violates the law. Thus AMD must first prove that Intel has a monopoly, a slam dunk in the opinion of AMD executives, as well as show that it abused that position.

"AMD needs to show that Intel has effectively impaired competition in the PC market. Its not enough to show that Intel is just a behemoth and a monopolist. AMD has to prove that Intels practices have resulted in less competition or higher prices," said Hillard Sterling, an antitrust lawyer at Freeborn & Peters LLP, in Chicago.

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