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EU fines Intel: The sky is falling!

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The internet is imploding. Aparently, the world is ending, and it’s all the EU’s fault.  Oh, if only they hadn’t fined Intel.  I mean, eveyrone wants to buy Intel, right? BAD EU.


This isn’t about AMD or Intel’s current technology, or pace of technology, or the current price/performance or anything like that.  What this is is very simple:

Intel, being in a monopoly position has the ability to lean on customers, spread FUD, hand out “incentives” and “samples,” and generally do things that are considered as “good business practices” when you are not a monopoly.  (I.E. they are a well accepted and understood pack of business practises designed to promote your organisation, and screw your competition.)  These practices are VERY common in IT, as the ball swings between those who have something cool and innovative, and those who are selling yesterdays crap.

Now, and I know this is where you all get lost, these business practices are illegal if you are a monopoly.  Why? Because capitalism is (supposed to be) something that provides the best possible advantages to everyone via the magic fairy dust of competition.  If, as the 800lb gorilla amongst the mice, and you use your position to step on as many mice as you can, you’re generally regarded as stifling rather than encouraging competition.  You may not like it, you may disagree with it, but that is the law as it stands today.

Intel did this; full stop.  When AMD finally had a good product, rather than answering with a good product, they stepped on AMD over and over again until they could bring the great machine of their company into play and truly answer them technologically.  In a competitive environment, (and without Hector Ruiz,) AMD should have been able to make huge inroads into market share.  They should have been able to buy/build more fabs, ramp up production, sink loads of cash into R&D and actually meet Intel toe to toe for decades to come.  Yes fanbois, regardless of how much you love Intel, that was how far ahead AMD was at the time all these various anti-trust investigations started.

In the meantime and betweentime, Intel shart all over AMD, which caused them to devote an abnormal amount of their resources just to getting places like Dell to buy their chips.  Not an objective soul can honestly say Dell was all Intel because there was no demand.  HP ran roughshod over them for years because they didn’t shift AMD kit.  Customers screamed up and at them to sell them AMD kit of all flavours.  Dell (amongst, I have to admit, quite a few others,) only did so when Intel said “okay, we’ve finally got a price/performance answer to AMD, sell whatever you want.”  (The fact that various lawsuits were now out against Intel, investigating this very thing might also have played into this.)

Add in the “freebies” and “promotional items” which meant that ON THE WHOLE, company X got Y units for below the cost of production.  (Thus undercutting AMD severly, who didn’t have the resources to use loss leaders like that.)

So, in short, the point is that a way back when, the 800lb Intel gorilla stepped on the AMD mouse. In doing so, they prevented AMD from capitalising on the excellent work they had done in advancing technology, and thus hampering their ability to truly pump more money into R&D, thus really cutting into their ability to be competitive in the medium and long term.  This then meant that Intel had ensured that as soon as they finally caught up to AMD there would be no possible way AMD could pull ahead again.

That ladies and gentlemen, is how the consumer was hurt by this business. The EU fines are about the harm done to the CONSUMER.  Not to AMD, VIA, or other companies.  They are about what Intel did wrong to you, me, and the computer buyer down the street.  Intel used tactics that are illegal to use as a monopoly to directly harm AMD’s long term chances of being able to pump adequate money into R&D.  Thusly harming it’s ability to be a medium or long term competitor.  Does Nehalem walk all over Shanghai? Yes.  Why? Because Intel spend billions making sure that it would.  That means that for the forseeable future, Intel can rest on it’s laurels, not innovating nearly as much as it would have to if AMD were biting at it’s heels.  It also means that Intel sets the price, because AMD doesn’t have the resources to produce enough volume to drive the price down.

On a personal note, I would not honestly be shocked if Intel spent more money per year stepping on AMD than AMD actually had in REVENUE.  You honestly have to bear in mind the difference in size of these companies.  AMD is not the slightly smaller plucky underdog.  AMD is vastly, VASTLY smaller than Intel, and exist only because Intel lets them continue to do so. You can bet that every year at Intel, there is a meeting between people much more intelligent and worldly than I where the question is asked: “do we make more money by allowing AMD to continue to exist, or do we wipe them out for good, and just eat the anti-trust lawsuits?”

So please try to expand your minds beyond “AMD chips are not as good as Intel’s, thus this is all bollocks because who would buy AMD?!?!?!?!?oneoneone!!111!1oneone.”  Think about WHY AMD is so far behind, when they were, not that long ago, dramatically ahead.

Thank you, and good night.

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