AMD vs. Intel Leaves Apple Untouched

Industry consensus is that the recently filed antitrust lawsuit against Intel will have minimal effect on Apple, despite the computer company's interest in Intel chips.

Industry analysts are downplaying speculation as to whether AMDs recently filed lawsuit against Intel will have any effect on Intels relations with Apple, which recently announced that future Macintosh computers will be based on Intel processors.

On June 27, Advanced Micro Devices Inc. filed suit in Delaware, claiming that Intel Corp. violated provisions of the Sherman Antitrust Act, the Clayton Business Act and the California Business and Professional Code. The alleged violations include anticompetitive acts such as pressuring PC manufacturers to reduce or eliminate AMD-based products and influencing retailers to favor Intel-based PCs over ones using AMD chips.

This move comes after the Japan Fair Trade Commission delivered a warning in March to Intel about violating antitrust laws.

Examples of such violations included giving rebates to five Japanese PC manufacturers who agreed to limit or eliminate use of AMD processors.

/zimages/1/28571.gifRead more here about AMDs antitrust lawsuit against Intel.

Though Intel stated publicly that it would change some of its business practices in response, company spokesperson Chuck Mulloy said that the company denied most of the allegations against it and disagreed with how the Fair Trade Commission had interpreted the law.

Tim Bajarin, president of Campbell, Calif.-based Creative Strategies, said he didnt see "any repercussions or impact for Apple" in the filing of the U.S. suit.

"The real issue," he said, "is getting to the heart of what AMD says they have as evidence."

Bajarin said that the U.S. suit seemed based on results from the Japanese case, which found that one company was pressured to agree to purchase all its processors from Intel or risk its contract; another company was offered rebates from Intel only if the company did not use AMD processors in any of its computer lines; and another company was pressured through pricing and availability terms to keep its purchase of AMD processors to 10 percent or less of its total.

Bajarin said that it was "incredibly risky" for AMD to file the suit. "The question is," he said, "how can they prove it? Call top officials at Fujitsu to testify?"

Martin Reynolds, an analyst at Gartner Inc., headquartered in Stamford, Conn, agreed, saying, "The lawsuit should have no effect on Apple."

"However," he said, "it does raise the question of why Apple selected Intel over AMD. There was no existing business, so there can be no possibility of coercion based on rebates. It isnt too presumptuous to assume that Apple made the decision based on the facts that AMD and Intel offered."

/zimages/1/28571.gifClick here to read more about Apples decision to move to using Intel processors in Macs.

Peter Glaskowsky, an analyst at Seaford, N.Y.-based Envisioneering Group, agreed that there likely would be no measurable effect on Apple Computer Inc., either immediately or by next year, when Intel-based Macs are expected to hit the market.

"Apple has not said if it has signed any contracts with Intel," Glaskowsky said. If the two companies have a deal about developing core logic chips, such as memory controllers, Glaskowsky said, theres "no sense" in looking at AMD processors, as mixing these with custom-designed Intel controllers would not likely work.

However, Glaskowsky said, if this is not the case, then "Apple could potentially shop around" for processors. He noted that Apple has historically designed and developed its own onboard chips, although, he said, Apple could be working with Intel to design or manufacture these components.

If the suit, which is currently entering the discovery phase, goes forward to trial, Intel could be forced to curtail allegedly pressuring behaviors, Glaskowsky said, and if so, "Intel would have to fall back on its price per chip" and not strategies such as tying price per chip to the exclusive use of Intel in a companys product line.

"If Apple is working with Intel on custom chip designs," he said, "theyre not likely interested in talking with AMD anyway … However, [Apple CEO Steve] Jobs has always stressed the idea of options in public."

Apple representatives did not offer comment.

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