We spoke with industry and legal experts to get more detail on some key issues in AMD’s suit against Intel, including what it might mean for enterprise users.
Advanced Micro Devices, the underdog in the explosive x86 processor market, is taking its giant rival Intel to court. In a complaint it filed late last month, AMD claims that Intel has used illegal tactics, including threats, coercion and monetary incentives, to keep systems vendors from embracing AMD’s competing product. “AMD’s market share has not kept pace with its technical leadership. Intel’s misconduct is the reason,” AMD claims in the 48-page complaint it filed in U.S. District Court in Delaware June 27. AMD is demanding a trial and aims to get the case in front of a jury by the end of next year. We spoke with industry and legal experts to get more detail on some key issues:
Why is AMD suing Intel?
While AMD has stepped up innovation with its 32-/64-bit Opteron processor and its Athlon 64 chip for desktops, it continues to hold just a slice of the x86 processor market. Meanwhile, Intel’s sales accounted for 90% of the revenue in the $5.8 billion market in the first quarter, according to IDC. AMD says Intel has used this market dominance to limit competition – and thus stifle innovation and ultimately hurt the consumer with higher prices and lack of choice. In its complaint, AMD lists 38 companies that it says have been economically coerced by Intel to avoid – or limit their purchase of – AMD’s products. In the case of Dell, the only Tier 1 systems vendor not to carry AMD-based products, for example, the complaint states, “In discussions about buying from AMD, Dell executives have frankly conceded that they must financially account for Intel retribution in negotiating pricing from AMD.”
Why is AMD suing now?
This is not the first time AMD has taken legal action against Intel. In fact, AMD filed a similar complaint in 1991. That case was resolved as part of a global settlement of all outstanding litigation between the two in 1995. This time, however, some industry experts say AMD might have stronger footing. While the chip maker was clearly the underdog in the mid-1990s, its success with its 32-/64-bit Opteron chip and Athlon 64 processor, as well as its dual core technology, make AMD a more formidable competitor. In addition, the ruling in March by the Japanese Fair Trade Commission finding Intel’s conduct there anticompetitive might give AMD’s claims more weight in the U.S.
What could the outcome of the case mean to network and IT professionals?
Industry experts caution that it could be quite a while before an outcome is reached. When it is, it’s unclear exactly how it will impact end users. If AMD wins its case, then it will be good news for technology buyers. AMD claims that Intel’s discounting practices and sweetheart deals are hampering competition and putting products on the market at higher, monopoly prices. An AMD victory would mean more freedom of choice, likely driving down prices. On the other hand, some industry observers note that Intel might argue that its processors running Windows have been the very reason why PCs and servers have been commoditized: Since vendors are offering very similar products, they must differentiate themselves on price.
What could the outcome mean for PC and server makers?
If it’s found that Intel has been engaging in illegal practices, it could mean the end to the sweetheart deals for Intel customers. That would be bad news, at least in the short term, for OEM bottom lines. But AMD says that over the long term, its victory would restore a true competitive marketplace, which would drive down microprocessor prices.
How difficult will it be for AMD to prove its claims?
The bulk of AMD’s evidence has to do with Intel’s dealing with third parties. As a result, AMD will have to identify through the court’s discovery process the people who dealt with Intel, take depositions and get documents illustrating the anticompetitive behavior. AMD has little control over what such witnesses will say. But AMD has already scored a victory in this area. Last week, AMD said that the U.S. district court had granted its request for documents from nearly three dozen computer companies be preserved for use as evidence in its case.
