AMD CEO: Intel Is a Monopoly, Microsoft Isn't

In a keynote address this morning to the American Antitrust Institute in Washington, D.C., AMD CEO Hector Ruiz gave attendees what he described as "an idea of what it's like to do business day in and day out when you are competing against an abusive monopolist." Although he also invoked the phrase "illegal monopoly," he left a convenient 846-word buffer zone between that phrase and his first invocation of the term "Intel."

"I do not need my fortune teller hat to tell you one truth about which I am absolutely certain," Ruiz told attendees, "There is no proper or defensible place for illegal monopolies in the 21st century global marketplace...My purpose is not to argue for competitive advantage - we know how to compete. My purpose is to lay out the facts so that law and economics can do their job to protect consumers."

When a certain unnamed monopolist is permitted to do business as it wishes, Ruiz explained, its competitors may be more efficient and more innovative, though it cannot form partnerships and engage in cooperation with other players in the market. "All of that yields the one outcome antitrust law is designed to prevent," he continued, "consumers suffering at the hands of a monopoly by being forced to pay higher prices for what are all-too-often inferior products."

Evidence of that inferiority, he stated, comes from the fact that desktop computers have not fundamentally changed in the last decade-and-a-half, except perhaps for the introduction of flatter monitors and wireless connectivity.

When new laws brought an end to monopolies such as Standard Oil and the original AT&T, Ruiz' speech went on, a multitude of players were enabled to enter those markets, creating not just more competition but more cooperation and innovation. New players could enter markets and compete on a level field.

Hector Ruiz, CEO, AMDFor instance, he cited, "Google, Microsoft, and computer manufacturers like HP and Dell all owe their existence to the simple fact that competition replaced forced exclusivity and allowed a variety of players to compete and succeed."

Only after Ruiz mentioned those four names did he invoke the dreaded "I" word.

An iSuppli quarterly report issued in April showed Intel was responsible for having earned 80.2% of the world's global sales of microprocessors, with AMD earning 11.1% and smaller players the remainder. Though this is down from a high of 86% for Intel in the first quarter of 2004, it's a sizable 4.5% gain over the previous quarter, and a drop of 4.6% for AMD over the same quarter.

US law does not explicitly specify how much share a manufacturer must have of a given market to qualify as a monopoly. However, it does not stipulate monopolies to be illegal either, as so many discovered over the course of the Microsoft antitrust trial. Being a monopoly means a company has certain extra responsibilities to maintain and ensure competitiveness, and prevent erecting barriers to entry for competitive players.

Ruiz cited examples of both upheld and alleged anti-competitive behavior on Intel's part, including findings that it paid for exclusivity rights among Japanese computer manufacturers, Intel's alleged exclusivity deals with German retailers (which is the subject of AMD's antitrust suit against it in the US), and a shareholder lawsuit against Dell alleging that company received $1 billion per year in rebates from Intel prior to its decision last year to end its exclusivity arrangement and do business with AMD.

But analysts credit Intel's recent market share gains over AMD to its introduction last summer of far more competitive processors at price points that were near to, or lower than, AMD processors - in many segments of the market, for the very first time. Recent performance tests from respected independent sources show Intel has not yet ceded that price/performance lead, though its margin has slimmed somewhat since last year.

In a recent conference call with AMD senior vice president Henri Richard, he advised reporters to no longer expect any one company -- Intel or AMD -- to hold the performance lead in CPUs for any more than a six-month stretch.

But in response to a question as to whether AMD now considers itself in a performance disadvantage against Intel, Richard alleged that Intel was being anti-competitive not because it failed to be innovative or was overcharging customers, but that by his description, Intel had decided to release a major new series of CPUs that it was not prepared to sell in volume.

"Our competitor, because they were under such duress given our leadership in the marketplace, elected to announce an architecture in the middle of last year that was not available in volume," stated Richard in April. "So what you had was a lot of hype around Core 2 Duo and a lot of Pentiums [that had reached their] end-of-life in the marketplace. So I'm confronted into a situation where, who am I competing against? A product that's being talked a lot about but that's not available, or a product that's being dumped because it's end-of-life, running too hot anyhow, and why should I chase that product down?"

As Richard put it, AMD was faced with a situation where it had to decide whether its Athlon 64s, Athlon FXs, and Opterons were to be price-competitive with the new Core 2 Duos or the older Pentium Ds, which were then being phased out.

"We found ourselves with a single product line," Richard continued. "We're not in that product transition, and frankly, in some case, at a disadvantage because it made no sense to devaluate our products to compete against old Pentium products. But on the other hand, I needed to be competitive if I was actually sold against the Core 2 Duo, which was a much better product than their preceding generation."

But this is not the same story Hector Ruiz told attorneys at the American Antitrust Institute conference this morning.

"The IT industry is being held hostage by Intel," Ruiz proclaimed, "a fact that has detrimental effects across the board, and it has gone on for too long. Consumers are punished by less choice and innovation, and higher prices.

"Some of you know enough to agree with me," he closed. "Some of you do not know enough yet to decide. But all of you should agree on this: There are serious issues about the microprocessor market that need to be examined without taint of politics or ideology. Your devotion to the enforcement of antitrust law makes you ideal candidates to assume this responsibility. Not for me. Not for my company. But for the values for which you strive - competition, choice, consumers."

© 1998-2019 BetaNews, Inc. All Rights Reserved. Privacy Policy - Cookie Policy.