Intel’s FTC Settlement: Are the Chips Up or Down for AMD?
How’s this for ironic: Intel reached a proposed settlement with the FTC today but AMD’s shares aren’t budging on the news. Hmmm…. Will the settlement foster a level playing field in the microprocessor market? Was there a level playing field already in place? Or are pundits unimpressed with the FTC’s work here? The VAR Guy provides some perspectives.
To understand the situation, rewind to about 2003 or 2004. At the time, many customers were starting to demand AMD’s Opteron server processors — which offered the best of both worlds, screaming 32-bit and 64-bit application performance. Intel, in stark contrast, was lumbering with its attempted transition to 64-bit Itanium processors, which didn’t handle the 32-bit computing world so well.
AMD Inside? Nope
Now, here’s the irony — and the potential smoking gun: Dell, among the leading providers of x86 servers, for some strange reason refused to offer AMD’s Opteron on Dell servers for quite some time. The PC giant finally caved into customer demand and introduced Opteron-powered servers in 2006. But why was Dell a year — or two, or three — late to the Opteron party, especially when Dell’s super-efficient supply chain allows the company to rapidly introduce new products worldwide?
The answer to that riddle allegedly involves an anticompetitive deal between Intel and Dell. You’ll find a simple-to-follow recap here from The New York Times.
Bury the Hatchet
Fast forward to Aug. 4, 2010. ComputerWorld reports:
“Intel has reached a proposed settlement with the U.S. Federal Trade Commission in the agency’s antitrust complaint, with Intel prohibited from giving computer makers benefits for exclusively using its chips. The settlement, announced Wednesday, also prohibits Intel, the world’s largest chip maker, from retaliating against computer makers if they do business with other suppliers.”
The bottom line: CNNmoney calls the tentative Intel-FTC settlement, which is subject to review, a wrist slap. Intel, by the way, admitted no wrongdoing.
The VAR Guy wonders: Will Intel ever have to pay AMD damages for allegedly locking AMD out of the Dell server market? Or does the proposed FTC settlement address alleged concerns from AMD?
Hmmm… The VAR Guy will be checking in with multiple sources in the days ahead. In the meantime, Wall Street seems to agree with CNNmoney’s perspective. As of 11:28 a.m. eastern today, Intel shares were trading relatively flat as were AMD shares. The proposed FTC settlement, it seems, was anti-climatic for all involved.