US Report: Intel rivals find little relief in complaint

The Federal Trade Commission's complaint against Intel may spell relief for PC makers who use its chips, but offers little solace to the company's rivals, said industry execs and analysts on Monday.

"They are attacking the symptoms of Intel's dominance rather than the core problem," said Mike Feibus, principal analyst with Mercury Research Inc. "They are not addressing the issue of why Intel has over 80 percent of the market."

On Monday, FTC Commissioners voted 3-to-1 to file an administrative complaint against Intel for using its monopoly power to punish PC makers -- its primary customers -- who did not accede to its wishes. The FTC decided on Monday to pursue a complaint against Intel for anti-competitive behaviour. Intel has all but squashed its rivals in the core-logic chip set market

In three separate cases, the complaint alleges, Intel cut off those customers from advanced information about its processors when they showed signs of competing with the chip giant. "Intel has a club - a nuclear bomb - to hold over its rivals," said William J. Baer, director of the FTC's Bureau of Competition and the man who is leading the charge against Intel.

Despite the sentiment, the complaint filed against the company only aims to help Intel's customers -- PC makers such as Digital, Intergraph and Compaq. All three companies have had the flow of advanced product information cut off in response to suits filed against Intel, according to the FTC complaint.

But the action does little for companies that compete with Intel directly in such markets as PC processors, core-logic chip sets and graphics chip. These players are worried about the same "club" that threatens Intel's straying customers. "In graphics, Intel is not a leader," said an exec at a popular graphics chip company on condition of anonymity. "But if Intel holds back specs and gives them to their internal groups first - then we're screwed."

Intel recently re-entered the graphics chip business with the Intel740 graphics chip. While the chip is behind other just-announced products from rivals, Intel's sales and marketing muscle has competitors worried. "Even though our situation is not quite the same (as Intel's dealings with Intergraph, Compaq and Digital), it would be equally damaging to our company if we cannot get the specs to Intel's next great architecture," said Lou Paceley, vice president of corporate marketing with graphics chip maker Nvidia.

Such power - and its ability to shut out competitors from its proprietary Pentium II bus architecture - resulted in core-logic chip set makers being all but squashed. However, just the fact that there is a case pending may keep Intel ultra-sensitive about how it competes with its rivals. "Those guys (Intel's rivals) are getting a lease on life, because Intel knows the federal government is watching," said Feibus.

Baer would not say if the FTC was considering a broader action to include those markets. "Today is today," he said at Monday's press conference. "We are only pursuing what is in the complaint."

Yet, some competitors hope the Commission will act soon with a broader complaint against Intel. "(The FTC) has made known that a broader investigation will be ongoing," said David Lucas, senior staff counsel for Intergraph.

Unlike the Department of Justice case against Microsoft, the FTC case is expected to take anywhere from four months to a year, said Baer.