For those interested in computer technology, here's sometihng.

[Kieraganion]

news analysis In the late 1990s, when Epson's U.S. division decided to adopt Cyrix chips for its PCs, the reaction from headquarters of the Japanese conglomerate was swift and ominous.

"Epson and Intel had an extensive cross-licensing arrangement, and I got a call from the VP of licensing," a former Epson executive said. "'We really want you to reconsider your decision,' he said. Clearly, someone had gotten to him."

That someone, according to this executive, was from Intel--Cyrix's archrival. And even though the U.S. group didn't bow to the pressure from headquarters, Epson eventually turned to Intel when Cyrix ran into manufacturing problems.

Aggressive dealing is nothing new in the technology industry, but the Epson experience illustrates how Intel has elevated the practice to an art form. Unlike other companies known for clumsier tactics, industry veterans say the leading chipmaker has risen to the top of its business at least in part by making deals through a combination of incentives, assistance and hard-nosed negotiating.

These tactics have fallen under new scrutiny in a controversial antitrust lawsuit filed against the company by competing chipmaker Advanced Micro Devices. AMD, which has said it will produce e-mails to back its claims, charges that Intel used threats and rebates to keep PC makers from cutting deals with competitors. South Korea and Europe have also begun to look into Intel's tactics.

"Our potential customers are not free to choose on the basis of price and performance. That is why we are not more successful," said Tom McCoy, executive vice president of legal affairs at AMD. "Major tier-one customers are unable to serve true market demand. To do so would run counter to Intel's dictates."

Intel has emphatically denied any wrongdoing and has declined to discuss issues surrounding the trial beyond its official statements, such as its response issued Thursday: "AMD seeks to impede Intel's ability to lower prices and thereby allow AMD to charge higher prices. AMD's colorful language and fanciful claims cannot obscure AMD's goal of shielding AMD from price competition."

Nevertheless, the AMD suit has drawn wide publicity, not just because of Intel's size but also because the company has been something of a Teflon defendant. Charges brought by semiconductor manufacturer Digital Equipment in the early 1990s led to an amicable settlement that seemed more like a real-estate deal than the culmination of a contentious legal dispute. Antitrust charges brought by another competitor, Intergraph, failed to stick, though it won more than $600 million from Intel in patent settlements.

Intel has largely eluded the wrath of government agencies as well. A case brought by Federal Trade Commission was settled in less than a year. Earlier this year, Intel agreed to accept penalties from Japan's trade agency but paid no fine and admitted no wrongdoing.

Those familiar with the situation say Intel can effectively defend itself in such cases because its tactics are far more subtle than those of other industry leaders with reputations for bullying and arrogance, such as Microsoft, the software half of the "Wintel" juggernaut

Steve Tobak, a principal at Invisor Consulting who used to compete against Intel in the late 1990s while at Cyrix, describes Intel's business practices this way: "The stick is implied. They do it in a way that won't stick in court. But they also have a carrot. And it's a powerful and many-faceted carrot."

Those facets can include such tangible commodities as preferential chip allocation, marketing dollars and introductions to big customers--which can all easily translate into millions of dollars.

Hardware makers that take technological assistance from Intel, such as blueprints or royalty-free reference designs, are often predetermining their eventual adoption of its chips. But these plans also let them cut engineering budgets and the time required to come to market.

To maximize the timing and nature of these incentives, Intel also maintains a highly effective network of industrial intelligence. Often, when Cyrix was about to sign a deal with a second- and third-tier motherboard maker for a few thousand chips in Europe or Taiwan, Tobak recalled, Intel would swoop in with co-op dollars.

"No deal was too small," he said.

By contrast, the competition has never been quite as organized. Several years ago, sources say, Cyrix, AMD, Compaq Computer and IBM formed something called "The Sundance Consortium" to
develop and promote a non-Intel PC platform and held secret meetings in Chicago. Disagreements ensued, and the coalition eventually fell apart.

Charges hard to prove
With all the disparate factors involved in every deal, it is difficult to determine whether any particular Intel contract was the result of unfair manipulation or concessions made to a formidable negotiator. Sources say many of Intel's partners and customers--powerful companies in their own right--have been able to hold their own at the negotiating table.

That is what happened when IBM had planned to come out with a ThinkPad in Japan with a chip made by Transmeta, according to independent accounts by two former Transmeta executives. IBM canceled the project after Intel agreed to give it preferential allocation on desktop business processors, the Transmeta executives said. (For its part, IBM has said it did not adopt Transmeta chips because of performance issues.)

Manipulation can also go both ways. A former Cyrix executive once said Ben Rosen, the longtime chairman of Compaq, used to call him every few months and ask him to sit in the lobby. The reason: Intel sales representatives were coming to visit, and Rosen wanted to make sure that they saw one of their competitors on site. In return, Compaq adopted Cyrix for a few computers.

"When you're in the process of putting together your PC lineup, you negotiate up until the last moment," one former high-ranking computer executive said. "It's not like no one pretends there isn't competition out there."

Other business factors that have nothing to do with hardball tactics or antitrust issues often influence decisions. A former Gateway executive, for instance, said the company stopped using AMD chips in 2001 because the computer maker wanted to streamline manufacturing and inventory.

Reasons such as this make it difficult to prove long-standing patterns of unfair practices in many businesses. A central charge of AMD's lawsuit is that Intel uses a war chest of marketing dollars and rebates to edge out the competitor. But these kinds of incentives are used throughout the electronics industry--even by AMD.

In addition, according to one source within the company, Intel does not use some of the more aggressive rebate vehicles. So even if Intel is judged a monopoly, AMD must still show that Intel unfairly exploited conventionally accepted financial incentives.

Complicating AMD's claims further is the fact that computer makers and retailers love these funds. Intel generally offers four types of financial aid: volume discounts; Intel Inside funds for advertising; market development funds for promoting specific products, such as Centrino; and rebates, which, like volume discounts, are related to sales. Without these incentives, making money on PCs would be a harder proposition for many.

"You don't make money on hardware," one source said. "You make it on bags and batteries."

Some have speculated that AMD might eventually angle for a lucrative settlement, but that outcome would hardly be guaranteed. Although Digital and Intergraph obtained substantial settlements, their cases revolved mostly around patent infringement, not antitrust issues.

Patent cases are generally more threatening than antitrust disputes because a successful verdict could mean an injunction barring Intel from selling chips. AMD is not alleging patent infringement and likely never will because Intel has a royalty-free cross license to its rival's patents.

In the end, the most formidable challenge for AMD may be Intel's skill in walking the line between tough competition and take-no-prisoners hostility.

Unlike executives at Microsoft, whose trial proceedings sometimes had the feel of cathartic therapy for angry PC manufacturers, Intel's dealmakers "are more likeable in their approach," according to once source who worked with both companies.

Even some of Intel's adversaries refer to the company's sales representatives with a good-natured acronym--"FIGs," for fill-in-the-blank Intel guys.

Others, however, remain bitter even after obtaining multimillion-dollar settlements from the company.

Despite repeated denials by Intel, former Intergraph CEO Jim Meadlock insists that the chipmaker withheld technical information and products in trying to force his company to sign a patent cross-license.

"They destroyed our hardware business. We were on Windows NT and, at the time, there was no alternative," he said in a recent interview. "They put tremendous pressure on you. It was tough to get someone to testify against them."

So the question is, as the artical is called, is Intel "evil"?

Honestly, I think they're just good soldiers in the war that is IT (crappy analogy... But you try and think of something at 6:00am in the morning). And that's what it comes down to in the world of Business, how well you play the game. Take Intels' primary software producer, Microsoft. The biggest company in the wold, you think Bill made an impire by sharing his trade secrets and allowing thousands of smaller companies to flourish the market? Microsoft ran into a similier problem a few years back when it too was charged with overtaking the market (how about Electronic Arts since we're on that topic?). But trying to fight these big coprerations is like rubbing youself with butter and trying to climb a plastic wall on your ass. It's impossible. And to be really honest here, Computer Technology is not a simple as going to the market and choosing your favorite brand of jelly from the billions of others. Lets pull out the big guns shall we? You have Intel, AMD, Microsot, Western Digital, Nvidia, ATI, Creative Technology, and Macintosh (aka Apple Computers Inc.). This is the current end result from years of company bankrupcy and retreats from the likes of other companies. And now as far as CPUs go, Macintosh will be switching over the X86 chip base as of next year. But lets be honest here, like I said with the jelly. Try to picture a world without these big companies like Mircrosoft. Sounds heavenly doesn't it? But imagine going and buying a computer. You walk in the store and see about a thousand diferent brands, each one supporting a diferent OS. Each one using a diferent chipset, eaching one using a diferent video card and so forth. Now emagine youself in the shoes of a software devloper, having to script your program to work with a thousand diferent OSs, having to make it compatible for a thousand diferent systems and so forth. Now imagine that after all the hard labor and the YEARS spent trying to make the product as mainstreamed as possible how much a single program will cost. You see the problem now, when you try and take out the "big boys"? It will become ****ing CHAOS. Seriously, the entire industry will collapse if it doesn't have a medium. A market like this NEEDS stability.


Think about this:

"I'm sorry but the security program you've just pruchased does not don't run on this computer for the reason(s) listed bellow:

A. The version of the security program you've purchased does not support this OS, please take your copy back to the store from which it was purchased and check the software index under appendixs c10-c10098 for a version that supports your OS and it's current version. It is possible due to the increasing numbers of OSs that are now avaliable for the market, we have not yet heard of yours.

B. Due to the increasing number of hardware released monthy it's possible that eithr A) NO version yet a exists that supports your current current hardware specifications (be it HDD, CPU, Display Adapter, Sound Card, Motherboard, CD/CDR/DVD/DVDR/RW/-r/+r, USB Adapters, COMM Ports, or any other hardware not specified). Or B) This program no longer supports your hardware.

C. In all likelyhood your computer may be a shambling hunk of **** becuase it was built using a hundred diferent companies using hardware that is incompatible with other hardware simply becuase said companies cannot keep current with the variety in generel. In that case it's not our fault are your purchase is non-refundable.

Please call either the stores' tech support (From which your puchase was made), Or refere to the last 20 pages of your computers' manual for the listing of pnone numbers to the companies involved your computers' construction for further infromation."

[Unicron]

holy crap Batman!
Intel is indeed Evil

[Unicron]

just like mac/apple crap

[Splendiferous]

You lost me at "conglomerate"

[Kieraganion]

You don't have much of an attnetion span do you.


































It's ok, neither do I.

[niggers_Suck]

WHAT IN THE NIGGER **** WERE YOU THINKING MAKEING A POST THAT MOTHER****ING LONG!!!!! ARE U ****ING CRAZY!!?!?! thanx. Peace *****es

[mack]

Good thinking Kier, and I agree. As sorry as it sounds, I think of Bill Gates and Intel like companies in the same analogy as I view Attila the Hun, Alexander the Great, the American Railroad companies, etc.

Nobody ever agrees with their tactics, but in the end, they are creating a civilization/infastructure/vehicle at Ground Zero that we can all benefit from in the future. So a few buildings/companies/houses/tribes were razed in the way?

The ends can sometimes justify the means.

I do think, however that Bill Gates went too far. In this case--it doesnt seem to me that what Intel is doing is a "bad/illegal business practice"----it is simply acknowledging the LEVERAGE they have due to their massive market base.

Business negotiations are always tricky, and subterfuge, manipulation, maneuvering, and sometimes downright intimidation is par for the course! When a person/company is intimidated because they are dealing with a company that is larger, more massive, more wealthy, more informed, and more able......well: that's a fact of life, baby. No Congressional law can outlaw pure market strength. Its when it gets underhanded and goes outside the bounds of what is acceptable in negotiations.

And frankly, so far, it doesnt sound like Intel had gone too far to me.