Broadly, AMD says Intel uses its substantial market clout and financial strength to bully PC makers and chip distributors into either not signing deals with AMD at all, or punishing them financially when they disobey.
The complaint details some incidents it says show Intel threatened OEMs and distributors into either not working with AMD, or into dropping out of AMD marketing events, or downplaying the importance of their AMD relationships.
Just as there’s an actor in every courtroom lawyer, there’s a marketing executive hiding inside every attorney who authors high-profile legal complaints, and the AMD lawsuit is no exception in this regard.
The 48-page complaint, linked prominently at www.amd.com, is easy on the legalese, the text liberally sprinkled with references to superior AMD technology and allusions to threats, bribery, gunplay, and punishment beatings.
Most of the big PC and notebook makers are mentioned. Dell Inc, which has never bought AMD processors, has frankly conceded that they must financially account for Intel retribution in negotiating pricing from AMD, according to AMD.
AMD offered Hewlett-Packard Co one million free processors, when the two companies negotiated a deal for the Evo line in 2002, to compensate it for Intel’s expected retaliation, AMD’s complaint claims.
The retaliation in this case, according to AMD, was that Intel pressured HP into restricting the distribution channel for the AMD-based Evo boxes, and lobbied the company to fire the executive who had negotiated the AMD deal.
As a result of Intel’s coercion, the HP-AMD desktop offering was dead on arrival, AMD says. As of today, HP’s AMD-equipped commercial desktops remain channel-restricted, and AMD’s share of this business remains insignificant.
AMD says Gateway Inc went Intel-exclusive from 2001 and 2004 because Intel offered it cash incentives and, Gateway CEO Ted Waitt supposedly told AMD: I have to find a way back to profitability. If by dropping you, I become profitable, that is what I will do.
When Gateway and AMD renewed their relationship last year, building a line of AMD-based PCs for Circuit City, Intel beat Gateway to guacamole, AMD claims, without elaborating exactly what being beaten to guacamole entails.
IBM, Hitachi, Fujitsu, NEC, Toshiba and Sony are all listed as companies that have accepted market development dollars or other incentives in exchange for limiting or eliminating their involvement with AMD, according to the complaint.
The suit also recounts the tale of specialty manufacturer Supermicro, which was allegedly so scared of a retaliatory Intel that it built its Opteron servers in secret and marketed them in a limited edition mail-out brochure labeled secret and confidential.
AMD’s allegations don’t stop there. Intel has resorted to old- fashioned threats, intimidation and ‘knee-capping’ to deter OEMs from dealing with AMD, the firm says.
Among the kneecapped is allegedly Michael Capellas, who back in 2000 was CEO of Compaq. AMD claims he stopped buying AMD when Intel, unhappy with the relationship, withheld server chips Compaq needed to make its numbers, saying Intel had a gun to his head.
Companies were also coerced by Intel into steering clear of AMD marketing events and product launches, according to AMD.
Taiwanese PC maker Acer Co Ltd had planned to launch some AMD-based computers at the same time as AMD launched its Athlon64 in 2003, but withdrew from the promotion after receiving an in-person visit from Intel’s then-CEO Craig Barrett.
Barrett’s talk of severe consequences was enough to get Acer to drop out of the event, according to AMD. The complaint quotes Acer’s president as saying that such threats were usually done by lower ranking managers, not the Don himself.
Drawing on an April 2003 report by UK tech site The Inquirer, AMD says server makers were delivered veiled threats from Intel not to attend the launch of the Opteron chip. Kickback money was at risk, The Inquirer reported, citing anonymous sources.
Of course, this is only the opening salvo in the lawsuit, and only represents one side of the story. Intel, which has had only one day to review the complaint, has yet to address any of the specific AMD claims. That will come later.
Yesterday, Intel said in a statement: We strongly disagree with AMD’s complaints about the business practices of Intel and Intel’s customers. Intel believes in competing fairly and believes consumers are benefiting from this vigorous competition.
AMD has chosen, once again, to complain to a court about Intel’s success, with a legal case full of excuses and speculation, Intel said. Intel will respond appropriately to AMD’s latest complaints and is committed to successfully resolving these issues in court.