NotebookForums.com › Forums › General Notebook Discussions › Notebook Forums - General › Intel gets bitchslapped by FTC
New Posts  All Forums:Forum Nav:

Intel gets bitchslapped by FTC

post #1 of 49
3/8/05 at 8:08pm
Thread Starter 
http://reuters.com/newsArticle.jhtml...toryID=7836655
Quote:
Intel Corp.'s Japan unit tried to stifle competition in microprocessors by offering unfair rebates to personal computer makers, the country's antitrust watchdog said on Tuesday in a warning against the chip giant.

The warning was the Japanese Fair Trade Commission's second such action against a computer industry giant following a similar move against Microsoft Corp. last July.

Intel, the world's biggest microchip maker, immediately disputed the warning, which came with no monetary penalty.

After the FTC announcement, the European Commission said it was investigating Intel for possible antitrust violations in cooperation with Japanese authorities.

Japan's watchdog said the unit stifled competition by offering rebates to five Japanese PC makers that agreed either not to buy or to limit their purchases of chips made by Intel's rivals Advanced Micro Devices and Transmeta.

The FTC said such practices had been going on since May 2002 after the inflow into Japan of low-priced personal computers heated up competition in the domestic market.

That had prompted Japanese PC makers to turn increasingly to AMD and Transmeta chips, which were typically offered at a discount to Intel products, it said.

The share of Intel's central processing units in the Japanese PC market rose to 87 percent in 2004 from 73.2 percent in 2002, while AMD's share halved to 10.4 percent over the same period, according to data from research firm Gartner.

"In this case, a company with a dominant market position squeezed out rivals by doing business with the five major PC makers on condition of not using competitors' chips," an FTC official told reporters.

The five PC makers are NEC Corp., Toshiba Corp., Hitachi Ltd., Sony Corp. and Fujitsu Ltd., he said.
Reply
Reply
post #2 of 49
3/8/05 at 8:11pm
Quote:
"In this case, a company with a dominant market position squeezed out rivals by doing business with the five major PC makers on condition of not using competitors' chips," an FTC official told reporters.
Or they just had superior products. Especially with the Pentium M reigning supreme.
Reply
Reply
post #3 of 49
3/8/05 at 8:15pm
Thread Starter 
More details in this document:
http://www.iser.osaka-u.ac.jp/semina...rai_Feb_17.pdf
Quote:
The conduct of Intel

A) Rebate Program
Starting in 2001, Intel offered a rebate program to PC manufacturers who purchased CPUs for their lower-end or standard-type PCs, to compete against the AMD Athlon CPU. The rebate program has one or more options, as follows:

a) Benchmark ratio of using Intel CPU
The first option of the rebate involves setting a benchmark ratio for using the Intel CPU and then fulfilling the ratio. This ratio is called the “market segment share.” In this regard, the rebate program’s condition is that a PC manufacturer sets a ratio of PC sales for machines that incorporate the Intel CPU among the overall PC sales by the manufacturer, and the ratio is the dominant share. In fact, Intel agreed with NEC in May 2002 to pay up to *** million dollars as a CPU price discount and contribution charge for changing the platform cost for the fall 2003 models of NEC computers4. Intel’s contribution charge was *** million dollars, and the rest was the CPU price discount for the Pentium 4c 1.5G and Celeron 1.9-1.4G CPUs. These discounts correspond to ***% of the total expense. On the other hand, NEC committed to set its market segment share at 90% in Japan, 70% in Europe, and 80% in the world. In reality, NEC obtained *** million dollars during the period in correspond to ***% of the total expense due to actual achievement of the CPU transaction in that period.

b) Switch to Intel CPU
The second option of the rebate is to switch from a competitor’s CPU to an Intel CPU. In fact, Intel agreed with Sony in June 2003 to pay up to *** million dollars as a CPU price discount for computer models sold in the summer and fall of 2003. Intel contributed *** million dollars for the 2003 model catalog, *** million dollars for magazine advertising, *** million dollars for the 2004 model catalog, and *** million dollars for the 2004 model magazine advertising. For its part, Sony committed to switch all its CPUs from the AMD to the Intel CPU. Thus, after summer and fall, 2003, all Sony PCs had Intel CPUs.

c) Rejection of competitors’ CPU
The third option of the rebate is the requirement to reject a competitor’s CPU, even if a brand-new CPU released by a competitor has better features or costs less than the Intel CPU. In particular, Intel focused on the AMD Athlon XP and Athlon 64 as well as Transmeta Crusoe. Intel agreed with Fujitsu on March 2003 to pay up to *** million dollars as a CPU price discount for the model appearing in the summer, 2003. Intel paid a CPU price discount of *** dollars times *** thousand pieces. In return, Fujitsu committed to rejecting the AMD Athlon CPU for use in its PCs.

B) Intel Inside Program
Intel engaged in an advertising project, the “Intel Inside Program.” Based on the program, Intel contributes a part of a PC manufacturer’s advertising cost if the manufacturer builds in the Intel CPU in its PC. The average rate of the contributions from Intel to major PC manufacturers’ advertising cost is about ***%.

C) Other Conduct
Intel set a benchmark quantity of PCs built with Intel CPUs for major PC retailers beginning in 1999, and if a retailer accomplished the level, then Intel would pay a sales promotion fee. Intel requested that PC manufacturers stop advertising PCs built with AMD Athlon CPUs on the PC manufacturers’ websites. Manufacturers lowered the advertising level on their websites to move PCs with Athlon CPUs to lower levels of the advertising tree.
Reply
Reply
post #4 of 49
3/8/05 at 8:15pm
the Turion will change all that
Reply
Reply
post #5 of 49
3/8/05 at 8:18pm
Quote:
Originally Posted by B Nietsnie
Or they just had superior products. Especially with the Pentium M reigning supreme.
Having superior products and being a monopoly is fine. Using business practices that unfairly stifles competition is an abuse of being a monopoly and is a no, no

If intel has the superior products why bother offering discounts for their processors to prevent AMD sales? Why is intel so terrified of AMD it has to resort to such measures? Shame on you Intel.
Reply
Reply
post #6 of 49
3/8/05 at 8:18pm
Thread Starter 
AMD comments this here:
http://www.amd.com/us-en/Corporate/V...~95307,00.html
Quote:
AMD released the following statement today regarding the Fair Trade Commission of Japan’s (JFTC) Recommendation to Intel Japan K.K. (“Intel”) on its violation of Section 3 of Japan’s Antimonopoly Act:

“The JFTC found that Intel illegally manipulated the market to exclude competition, hurting PC users around the world,” said Thomas M. McCoy, AMD executive vice president, legal affairs and chief administrative officer. “Using market power illegally to limit innovation and, more importantly, consumers’ freedom to choose, cannot be tolerated. We encourage governments around the globe to ensure that their markets are not being harmed as well.”

McCoy continued, “The evidence of harm to consumers is obvious. By preventing PC manufacturers from using CPUs of their choice, Intel’s misconduct deprived consumers worldwide of the freedom to purchase computers that best fit their needs. Efforts by an avowed monopolist to artificially set market shares to exclude competition clearly violates antitrust standards globally.”

The JFTC has found that Intel has abused its monopoly power to exclude fair and open competition, thereby violating Section 3 of Japan’s Antimonopoly Act. These findings reveal that Intel used illegal tactics to stop AMD’s growing success and increasing market share, which reached 22% in 2002, by imposing limitations on Japanese PC manufacturers (which sell notebook and desktop computers to customers around the world).

The JFTC Recommendation is the culmination of an 11-month investigation that has established patterns of anti-consumer and anti-competitive behavior. The Commission found that, because of AMD’s inroads into Intel’s market share, Intel deliberately set out to artificially limit AMD by imposing conditions on five Japanese manufacturers that together represented 77% of all CPUs sold in Japan. Specifically, the JFTC found that:
  • One manufacturer was forced to agree to buy 100% of its CPUs from Intel; another manufacturer was forced to curtail its non-Intel purchases to 10% or less;
  • Intel separately conditioned rebates on the exclusive use of Intel CPUs throughout an entire series of computers sold under a single brand name in order to exclude AMD CPUs from distribution;
  • The mechanisms used to achieve these ends included rebates and marketing practices that includes the “Intel Inside” program and market development funds provided through Intel’s corporate parent in the United States.
The Recommendation notes that Intel imposed these restrictions in direct response to AMD’s growing market share from 2000-2002. The Recommendation also notes that as a result of this misconduct, the combined market share of AMD and a second, much smaller CPU company fell from 24% in 2002 to 11% in 2003.

The JFTC imposed a number of restrictions on Intel. Among them, it must notify its customers and educate its employees that it may no longer provide rebates and other funds to Japanese computer manufacturers on conditions that exclude competitors’ CPUs.

The European Commission’s investigation of Intel for anti-competitive business practices in the European market remains ongoing.

AMD’s Position on Fair and Open Competition
AMD stands for fair and open competition and the value and variety competition delivers to consumers. Businesses and consumers should have the freedom to choose from a range of competitive products that come from continuous innovation on a level playing field where everybody plays by the rules. When market forces work, consumers have choice and everyone wins.
Reply
Reply
post #7 of 49
3/8/05 at 8:34pm
Quote:
That had prompted Japanese PC makers to turn increasingly to AMD and Transmeta chips, which were typically offered at a discount to Intel products, it said.
Am I the only one who found this part of the article somewhat illogical? What is this supposed to indicate...that Transmeta and AMD tried to discount Intel in the first place? Or are those products simply cheaper? If so...then to an extent Intel is cutting their prices to remain competitive. Also, if whatever "that" refers to had prompted Japanese companies to turn to AMD and Transmeta, then how come there are no figures or numbers to show actual turnovers, or increases in the sales of Transmeta and AMD there? Instead, we simply see that the sales of Intel increased while AMD's decreased. It would appear as if Intel predicted that the influx of cheap computers would prompt switches to AMD, and offered their discounts before such an event occured! Either case, it seems to me that this article made something up, or used logical assumptions rather than factual events, or is just over-simplifying.
Reply
Reply
post #8 of 49
3/8/05 at 8:50pm
Quote:
Originally Posted by deltawalkerl
Am I the only one who found this part of the article somewhat illogical? What is this supposed to indicate...that Transmeta and AMD tried to discount Intel in the first place? Or are those products simply cheaper? If so...then to an extent Intel is cutting their prices to remain competitive. Also, if whatever "that" refers to had prompted Japanese companies to turn to AMD and Transmeta, then how come there are no figures or numbers to show actual turnovers, or increases in the sales of Transmeta and AMD there? Instead, we simply see that the sales of Intel increased while AMD's decreased. It would appear as if Intel predicted that the influx of cheap computers would prompt switches to AMD, and offered their discounts before such an event occured! Either case, it seems to me that this article made something up, or used logical assumptions rather than factual events, or is just over-simplifying.
Quote:
The FTC said such practices had been going on since May 2002 after the inflow into Japan of low-priced personal computers heated up competition in the domestic market.

That had prompted Japanese PC makers to turn increasingly to AMD and Transmeta chips, which were typically offered at a discount to Intel products, it said.

You're missreading it. What article is saying is that, cheap low end systems started appearing in Japan around 2002. AMD and Transmeta cpu's were being used in the beginning because of their lower cost. Because of this, Intel started offering "rebates" to manufactures to start using Intel CPUs in low end systems instead of AMD and Transmeta.
Reply
Reply
post #9 of 49
3/8/05 at 9:27pm
I like seeing any company get bitchslapped! I just hope this doesn't affect prices
Reply
Reply
post #10 of 49
3/8/05 at 9:28pm
If anything, Intel prices should drop as more AMD parts are used because of more competition.
Reply
Reply
post #11 of 49
3/8/05 at 9:30pm
Actually, Intel has been doing better:

Quote:
The share of Intel's central processing units in the Japanese PC market rose to 87 percent in 2004 from 73.2 percent in 2002, while AMD's share halved to 10.4 percent over the same period, according to data from research firm Gartner.
Reply
Reply
post #12 of 49
3/8/05 at 9:35pm
this is silly

you guys are just silly
Reply
Reply
post #13 of 49
3/8/05 at 9:43pm
Quote:
Originally Posted by GreenLantern7
this is silly

you guys are just silly
I'm not sure how the rest of the conversation went because I couldn't get past the first post. But I would tend to agree with you GL.
Reply
Reply
post #14 of 49
3/8/05 at 9:44pm
Thread Starter 
To cut a long story short...

In 2001:

Transmeta CEO: Intel Pressures PC Makers
Quote:
PC makers feel political heat from chip giant Intel to steer clear of rival processors, even as rivals offer better solutions, according to Transmeta CEO Mark Allen.

Asian adoption of Transmeta's power-saving Crusoe processor eventually will migrate to the United States despite that pressure, Allen said.

"I'm sure there is some pressure applied to them, no question," Allen said, responding to a question during the presentation at Merrill Lynch's hardware technology conference.

"[Advanced Micro Devices] has been trying to crack Dell for quite some time," he said. "[Dell gets] very preferential treatment, very preferential pricing [from Intel]," Allen said.
In 2005:

Transmeta May Exit The Chip Business
Quote:
After struggling for years for momentum and profits as a provider of processors for mobile computing platforms, Transmeta Corp. later this month may decide to pull the plug on its chip business and concentrate strictly on the licensing of intellectual property.
And finally:

Transmeta Quits Chip Business, Outlines Restructuring Plan
Quote:
Transmeta, a designer of power-efficient microprocessors, recently said it finalized its plans to exit x86 chip business and concentrate on licensing its technologies and microprocessor designs to other companies. The firm believes such move will increase the company’s profitability.
Reply
Reply
post #15 of 49
3/8/05 at 9:45pm
Quote:
Originally Posted by B Nietsnie
Actually, Intel has been doing better:
yes...doing better because of the years of fraud i laugh at thy intel
Reply
Reply
post #16 of 49
3/8/05 at 9:46pm
Quote:
Originally Posted by Rustican
You're missreading it. What article is saying is that, cheap low end systems started appearing in Japan around 2002. AMD and Transmeta cpu's were being used in the beginning because of their lower cost. Because of this, Intel started offering "rebates" to manufactures to start using Intel CPUs in low end systems instead of AMD and Transmeta.
No...I believe it's saying that lower-priced systems (which may use Intel or AMD or Transmeta processors...the article doesn't say) competed with Japanese systems, which prompted Japanese manufacturers to turn increasingly to AMD and Transmeta products, which are offered at a discount to Intel products (to use the word the article used) Either way, my question still stands. If these companies turned first to AMD and Transmeta, and only returned to Intel after Intel began offering discounts, then we should see a clear trend that way, i.e. we should see first Intel's market share shrink after the appearance of such low-priced products, and then increase at some point, which is the point of Intel's offering such rebates. However, no such trend had been mentioned, which leads me to believe that the article is merely offering its own speculations without much factual data.
Reply
Reply
post #17 of 49
3/8/05 at 10:14pm
Quote:
Originally Posted by B Nietsnie
Or they just had superior products. Especially with the Pentium M reigning supreme.
Superior in thermal characteristics, Yes.

But the PM performs like crap on many applications such as Games and Scientific apps.
Reply
Reply
post #18 of 49
3/8/05 at 10:49pm
Quote:
Originally Posted by HardBall
Superior in thermal characteristics, Yes.

But the PM performs like crap on many applications such as Games and Scientific apps.
Not sure about the Scientific apps (and honestly don't care about them , but most gaming benchmarks that I've seen from reviews of notebooks and desktop boards show the PM over the P4 and right on the heels of AMD64 chips.
Reply
Reply
post #19 of 49
3/9/05 at 10:08am
Quote:
Originally Posted by deltawalkerl
No...I believe it's saying that lower-priced systems (which may use Intel or AMD or Transmeta processors...the article doesn't say) competed with Japanese systems, which prompted Japanese manufacturers to turn increasingly to AMD and Transmeta products, which are offered at a discount to Intel products (to use the word the article used)

Ok, i checked myself. An inflow of cheap computers came into Japan. To compete Japanes builders turned to AMD and Transmeta chips to make their own cheap systems. That's when the Japanese branch of Intel prevented competition by offering rebates to Japanese builders who agreed to limit or not use non Intel chips at all.


Quote:
Originally Posted by deltawalkerl
Either way, my question still stands. If these companies turned first to AMD and Transmeta, and only returned to Intel after Intel began offering discounts, then we should see a clear trend that way, i.e. we should see first Intel's market share shrink after the appearance of such low-priced products, and then increase at some point, which is the point of Intel's offering such rebates. However, no such trend had been mentioned, which leads me to believe that the article is merely offering its own speculations without much factual data.
It really depends on timeing. If Intel agressively started their rebate program before AMD and Transmeta chips became common place, you wouldn't see a decrease in Intel market share. Regardless though, the rebate program itself is the problem because it's purpose was used to kill off the competition.
Reply
Reply
post #20 of 49
3/9/05 at 4:59pm
You know, back in the halycon days of yore, I was a dedicated intel consumer. I considered amd when the k62 came out, but it just wasnt feasible for me. When AMD and the p3 were competing, I again chose the intel product, for the additional instuction sets that were unavailable with the amd chip, and the overall feel that there wasnt that much of a performance difference.

Then came the pentium 4 and thus my loathing for intel began. Some bright chap at intel had a brilliant idea "Hey, if we perform fewer instruction sets per clock cycle, we could really crank up the the mhz on our cpus!" (previously the ispc's between a p3 and an amd were essentially the same). AMD quickly realized that the average consumers desire to research thier purchases before hand was second to none. Closer in fact, it was indeed none, and with that realization im sure a bit of panic set in, as they realized that while their product might perform equally well and be less expensive, they would fail to sell them due to the consumer mentality of "But a pentium 4 is 1.8ghz!! that AMD is only 1.63!!" (A condition that of course expanded as we see a 3400+ named part running at 2.2 ghz, roughly 2/3rds of what the naming scheme suggests as a comparable performance level for the p4 product). And so my hatred began.

We fast forward to a short while ago when intels pentium m cpu hit the market enmasse. Am I the only person who took vicious delight in watching consumers scratch their heads, wondering why a pentium m was so much slower than a pentium 4? Hah I say! By releasing the pentium M, which essentially a slightly updated pentium 3, intel has admitted to me the horrible mistake of the pentium 4, and returned to their roots.

I can finally purchase intel again (Albeit only Pentium M's, and with an eye towards the upcoming turion relase).

Have to watch them. as the saying goes, fool me once, shame on you, fool me twice...
Reply
Reply
New Posts  All Forums:Forum Nav:
  Return Home
  Back to Forum: Notebook Forums - General
NotebookForums.com › Forums › General Notebook Discussions › Notebook Forums - General › Intel gets bitchslapped by FTC