Ruminations on the electronics industry from David Manners, Senior Components Editor on Electronics Weekly.
Will The US Follow Japan, Korea and the EU?
With Japan, Korea and Europe finding that Intel breached anti-trust law, who will be next? The EU sent its report on the Intel case to the anti-trust authorities in 27 countries. The US FTC, which has been investigating Intel for a year, received a copy of the report and could be the next country to bring an action.
In America, it is likely to come down to politics. Under President George W Bush, the general idea was, apparently, to let dominant companies do pretty much what they liked so long as they didn’t directly hurt consumers.
Since the basis of the complaints against Intel has been that they offered rebates to customers who restricted their use of AMD chips, it could be hard to prove that rebates hurt consumers. After all, rebates mean cheaper chips.
On the other hand, it is possible to interpret the definition of consumer harm more widely. If a company which is dominant in a market acts directly to marginalise its competitors, the reduction of competitive pressure harms consumers because it acts to keep prices up and reduces the pressure for innovation.
This does happen. I’ve heard an Intel exec say that the timing of the introduction of a new process step (in that case when Intel would replace a silicon dioxide gate with high k material) would depend on whether and when the competition developed a competitive high k material.
Then, of course, there’s Wintel. Has Wintel hurt consumers? Without a doubt. Remember how quickly digital watches and calculators commoditised?
It happened in a few short years under the remorseless effects of Moore’s Law which means the cost of production of chip-based products halves every 18 months.
The first IBM PC, using MS-DOS and an Intel 8088, was launched in 1981 for $1,565. The succeeding 28 years of Moore’s Law cost erosion should have reduced that $1,565 to half a US cent!
Of course better processors, bigger memories, HDDs, CD drives, DVD drives, flat panels, an increasingly enormous OS, and a fabulous volumes of applications software and much else besides have combined to keep the price up at around the few hundreds of dollars mark today.
But computers have only relatively recently started to commoditise. For many years the price stayed close to that original $,565 price tag – and much of that was due to the power of Wintel.
Be that as it may, it is not going to be the effects of Wintel that determines whether a US anti-trust law-suit is initiated; it will probably not even depend on whether the FTC believes that Intel did, or did not, offer rebates to customers which were conditional on customers limiting their use of AMD chips; it will depend, it seems, on the zeitgeist in the Washington corridors of power.
On whether the new administration takes a tougher attitude to anti-trust enforcement than the last one.
The awesome power of the US lobbyists will, of course, have a part to play. But AMD can afford lobbyists as well as Intel.
It will, most probably, come down to the instincts of those who surround the new president.
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