2 min read

Intel knows how to fly under the radar

Chip-making giant is a brilliant tactician, but can the channel afford another price war?

The U.S. Federal Trade Commission, which has given IT companies such as Microsoft fits over the years, is not going after Intel.

Despite what some high-priced lawyers, foreign commissions and rival AMD believe to be highly anti-competitive moves from the Santa Clara, Calif.-based company, the FTC is passing.

The trade commission from the European Union is still investigating Intel on anti-trust violations. The reported claim is that Intel offered large discounts to PC vendors in exchange for not using AMD chips.

Dell Computer was the only PC vendor of note not to use AMD. Dell did an about-face last year and now offer AMD-based systems.

When you consider that the vast majority of the market would rather have Intel chips over AMD chips, does Intel really need to go this route?

You have to understand something about Intel’s culture. This is a company that is virtually egoless. Every employee has the same size cubicle. This includes the CEO. If you ever go to visit Intel Canada, do not forget to bring your telescope because you’ll need it to locate them. There are no signs on the building, much less the front door. They do not employ a receptionist. You must buzz one of its employees to let you in. All you see in front reception is a phone with a list of contacts.

Despite its meager surroundings, Intel Canada basically owns the Canadian market and has dominated worldwide for many, many years.

AMD has had, at best, five per cent of the market here. I find it hard to believe the team at Intel Canada are cutting these sorts of deals. Intel does not have to do any dirty tricks to win marketshare.

It is a different story in the U.S. But, who is really taking issue with Intel? Certainly not the mainstream press, nor the IT press. When Microsoft was called on the carpet by the FTC, there were thousands of stories about that. My all time favourite was the one where they suggested Microsoft move to Canada to avoid capitulating to the FTC.

With Intel, there has been next to no coverage. There are some blogs about its troubles in Europe and some briefs, but that is it.

There haven’t been any big editorials or deep-probing-analysis-type articles on the subject.

So maybe the FTC in the U.S. is thinking the same way – that it is no big deal.

This may change, but, for now, not a lot of people really care.

They might if the current chip pricing war between Intel and AMD continues.

According to IDC, the number of units sold in the third quarter of this year was up 14.3 per cent from the second quarter. That is six million more processors than were sold in the fourth quarter of 2006, which had been the top quarter for unit sales. Despite the record sales, there wasn’t much record revenue or profits.

Shane Rau of IDC said: “You would think record unit sales would equal record revenue, but that’s not the case.” This war comes at a bad time, in my opinion, because, despite the gains in the holiday buying season, most resellers still have to wait until early 2008 to close business-related orders.

If chip makers such as Intel continue to shrink margins, they will hit a lot of channel radar screens.