AMD-Intel balance unchanged by EU fine

...that the overall market dynamic isn't changing: technology still is king when computer makers decide whether to buy AMD or Intel chips.

"Most customers buy from both suppliers today. Most customers buy more or less from each supplier depending on the quality of the product, the competitiveness of the product, and the pricing... that dynamic hasn't changed in my career at Intel, which is 35 years. I don't expect it to change," Otellini said. "I don't think a customer is going to put him or herself at a disadvantage by buying an inferior or more costly products, just to try to walk a line that may be artificial."

Antitrust headaches
The European Commission's recent conclusions and fine certainly didn't make life any easier for Intel's sales force, though. It concluded that Intel used partially or completely hidden rebates to ensure computer makers would use Intel chips exclusively or nearly so. It also concluded Intel paid computer makers to cancel or delay the introduction of products using rival chips.

"My experience with salespeople is they'll say anything to get a sale. Intel now has to put some constraints on sales reps that would not be there if they had less than 70 percent market share in the European Union," said Gartner analyst Martin Reynolds. But that won't be enough to hobble Intel. "Intel's biggest challenge is not getting rid of competition, it's making sure of market growth."

The European Commission's move could further other actions against Intel, too, Reynolds said.

AMD's private antitrust case also alleges Intel rebates conditioned on exclusivity or near exclusivity and Intel payments conditioned on delaying AMD-based products, Wolin said. Any settlement awards or damages that Intel might end up paying in that case would go to AMD, not wronged taxpayers. That case is scheduled to go to trial in March 2010.

Though AMD's Wolin wouldn't comment on it, the Justice Department's new antitrust leader Christine Varney promised tougher enforcement of antitrust regulations, too.

Intel strongly denied any wrongdoing and is appealing the European Commission ruling. Otellini said the EU wouldn't accept some contrary evidence and suggested that its lack of written proof was lack of evidence, not of Intel operating in secret.

Overall, though, just as Intel's successes won't be erased by the fine and ruling, AMD's problems won't be fixed by it. The lawyers may be paid well, but engineers still are at the heart of the microprocessor market.