AMD on Intel: If you can't beat them...

Most remember the frenzied race between Advanced Micro Devices and Intel to bring the first dual-core processor to market. Yet a lesser know fact is the IBM was actually the first to offer it way back in 2001. It took another four years until Intel and AMD were ready to ship a dual-core that was commercially viable for PCs. Quickly the dual-duel heated up and now it looks like AMD is looking to get even for Intel stealing their dual-core thunder. If you recall, back in 2005, AMD and Intel were just weeks apart with each of their initial releases of the dual-core technology. While Intel was actually first with the blazing technology, the king-of-the-hill status was short lived. AMD came out with a faster and cheaper version within a few weeks.

But, not to be outdone, Intel rebounded with the a line of dual-core processors in 2006 that smoked the AMD offerings. Since then, AMD had been floundering as they have been unable to innovate and provide a compelling/competitive reason for anyone to choose their processors over Intel's.

The truth is that over the years, AMD has generally taken a back seat to Intel because reports show that their products were not up to the same performance standards, not because of the cost. They ran hotter, were slower and were apparently less desirous.

Pay Up 

So, it seems that the only way for AMD to get back is to take matters to the courts...And we know how fair and equitable that can be! In reports last week, Intel confirmed that there is a formal investigation by the FTC related to potential breach of antitrust laws. This came on the heels of an announcement by the government of South Korea that stated that AMD is going to get a upwards of $25 million from Intel for what they claim to see as anti-competitive practices. Interestingly, chip competitor Samsung has its headquarters in Korea.

The focus of the FTC probe is the rebates that Intel provided for some of its costumers as an inducement to buy from Intel. AMD feels that the rebates were unfair as they were essentially created to win over more customers for Intel over AMD. So, in effect, the rebates were a sales tactic to increase market share, more business to Intel and less to AMD.

Pay Off 

So, what am I missing? Is AMD contending that Intel is prohibited from adjusting prices and from attempting to grow its business? If by some miracle AMD is victorious, why not just have Intel private label the chips for AMD and also send them a nuisance entitlement check each month. 

Listen up AMD: If you want to sell more product... go back to the drawing board and innovate. Discover an enhancement to the technology. Beat them on performance and make your product better than Intel's, this way you won't have to whine and cry that they stole your ice cream. Pathetic. 

Related Reading:

FTC launches antitrust probe of Intel

Korea Trade Commission Fines Intel Over Discounts

X86 Timeline 

Disclosure: Horowitz & Company clients do not hold positions in securities mentioned as of the publish date. 

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Comments

 

Like he said AMD, Quit whining and build a better product.  My last AMD product was a dog (6000+ X2), so I went to Intel after 10+ years of AMD loyalty.  The New E8500 Core Duo 45 Nm is rock solid, and runs twice as fast.  So long AMD!

Dave Moore (Posted 06.10.08 8:55 AM) Report Abuse

"The truth is that over the years, AMD has generally taken a back seat to Intel because reports show that their products were not up to the same performance standards, not because of the cost. They ran hotter, were slower and were apparently less desirous."

I don't know what reports you were reading, but that is not true.  AMD enjoyed what many considered chip superiority for most of the life of their Athlon chip (which was years).  Gamers and Tech heads across the world were turning to AMD because it's chip was simply superior when comparing dolar to dolar value and often even when comparing GHz to GHz.  

I build custom computers for people and for years I dealt exlusively with AMD because it was a much better value for my customers.  It wasn't until Intel came out with the Core 2 Duo that they took the lead back from AMD...and boy did they take it.  I would prefer to use AMD because I think stiff competition to the industry's top dog is great for everyone, but the fact is, now I have to get Intel chips for the systems I build because AMD still doesn't have anything that really competes.  I hope that changes soon.

Nathan (Posted 06.10.08 11:47 AM) Report Abuse

I was loyal to AMD as long as they were producing a reliable faster product at a lower price - like the X2 processors.  However, my recent processor purchases have been quadcore Intel chips.  We still have an aging line of AMD X2 Workstations to replace within 6 months.  If AMD can do something between now & then, we can reconsider.  We haven't had any problems with our 3 year-old X2 lineup, so we will definitely reconsider AMD in 6 months.  Competition is good.  I actually hope AMD sticks around & keeps the price wars going.

The Rhino (Posted 06.10.08 11:55 AM) Report Abuse

I've worked in tech sales for about a year--I'm still new to the game.  Most customers that come into the store for a laptop shoot for Intel.  I think AMD has a bad taste in their mouth--and the pending investigation will cause the cost to go up.  How will this help AMD now?  They need to focus on how the improve their technology.  However, I also agree that Gamers and Techies, like myself, prefer AMD.

Dorothy (Posted 06.10.08 10:18 PM) Report Abuse

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