ERS also called pro-competitive justifications for Intel’s alleged monopoly profits implausible.
Intel spokesperson Chuck Mulloy said the study’s claims were wildly speculative and based on a number of assumptions and on a time frame that will skew the results. He noted that a press release and not the actual study had been made publicly available. It provides no value and no insight whatsoever, he said of AMD’s announcement.
ERS director Michael Williams said the analysis was based on the European Commission’s recent allegations of Intel strong-arming computer makers to not use AMD processors using methods such as illegal discounting and payments. The study also relies on an earlier Japan Fair Trade Commission claim that Intel offered anti-competitive rebates to OEMs, he said. Intel settled with the Japanese regulators in 2005 but continued to maintain its innocence.
Williams said the study asks not whether Intel has engaged in anticompetitive conduct, but how much Intel has gained from the alleged conduct. Consumers would save at least $61bn, with OEMs projected to save another $20bn, he said.
AMD legal affairs EVP Thomas McCoy said the study’s claims that Intel’s alleged monopoly profits of $60bn contradict Intel’s long-standing assertion that its business practices have resulted in lower prices. That $80bn translates into an Intel monopoly tax on every consumer who purchases a computer, McCoy said. That’s a jaw-dropping figure that helps explain why the European Commission brought antitrust charges against Intel – the real harm that its abuse of monopoly power causes competition and consumers.
ERS asserts that Intel’s price premiums would fall by 50% and AMD’s market share of units sold would rise from 27% to 35% during five years if Intel’s alleged monopolistic behavior was curbed. It also claims that OEMs would pass-through 75% of cost savings to computer buyers. This would translate to more than a 1.5% price reduction in a $1,000 desktop, said ERS.
Among the study’s key findings that supposedly rebukes Intel’s claim that its business practices promote competition was the rarity of firms that achieve a 16% or more economic return, which Intel has done during 1996 and 2006. The research firm also pointed to Intel’s reported losses on its non-microprocessor businesses, showing that Intel lacks sustained, competitive advantages from brand-name loyalty and other factors. ERS also noted the negative average economic returns earned by other semiconductor companies.
Intel’s Mulloy said AMD’s announcement shows that if you pay someone enough money you can get them to say almost anything.
