AMD goes to Delaware

Corporate OEMs are notoriously reluctant to use AMD's chips, despite price and performance advantages. We're all entitled to ask Intel why this might be

If this were Hollywood, the script would write itself. Cary Grant spends years perfecting his range of fizzy drinks, ending up with a lemonade that's tastier, healthier and cheaper than that made by Glugco, the industry giant. The public loves it, given the chance.

But when Grant goes to the big stores and the bottling plants, they don't want to know. Close to despair, he's about to give up when his girlfriend — Jean Arnold, who works for one of the stores — hears a Glugco heavy putting the pressure on her boss. A fusillade of dirty tricks and gathering momentum later, they get their day in court. The girl holds fast under heavy legal fire, a killer memo is produced with a flourish and the judge sends the Glugco villains down.

At least, that's how AMD sees its forthcoming battle with Intel. AMD's complaint — a fascinating overview of the world in which the two chip companies move — is that although it has consistently produced cheaper, faster and better products than Intel, the corporate market has not been given a fair chance to buy them. AMD's products are good enough to deserve a larger share, says the company, so why isn't this happening?

One by one, AMD details its dealings with the major vendors. Time and again, a major win for the Sunnyvale company turns to dust before the goods ship. HP turns down more than 800,000 free processors. Gateway declines AMD's offers, saying it was beaten to "guacamole" by Intel over a previous product. And Dell, which has a well-deserved reputation for ferociously slicing margins while maintaining quality, has never sold a single AMD-based product

Big business is hard business. It's no crime, per se, to offer discounts or to do "Intel Inside" deals where a company underwrites its customers' marketing. But what AMD is saying is that Intel has overstepped the mark and is using its market dominance to unambiguously threaten those who would otherwise diversify. A combination of razor-thin margins and what Toshiba called the "cocaine" of generous kickbacks, development funds and discounts has given Intel enormous financial power over the market, claims AMD, and it cannot grow as it deserves to grow.

A complaint is no proof. AMD needs to get the girl in the dock and the memos before the judge before it can break open the lemonade. But on one point AMD is clearly right — the market is not working, and we need to know why.

Intel has a case to answer.

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