Davids Still Win

Intel, the chip major which supplies close to a whopping 80% of PC
microprocessors, has ended its long drawn legal battle with AMD by agreeing for
a $1.25 bn payment. AMD has all the while claimed that Intel had practiced
exclusionary tactics, that led to rewarding system vendors using Intel; and took
a step-motherly treatment for those vendors using AMD chips.

Despite Intel stating that it never involved in such unfair business
practices, it has opted to settle the dispute mainly to liberate itself from any
further legal complications. The case is scheduled to come on trail in Delaware
next year. In the event of the verdict going in favor of AMD, it might have hurt
Intel more in terms of damages. Furthermore, it would have also hurt Intels
brand. Given that, this out of the court settlement is seen as a strategic move
by the industry analysts.

Intel over the last few years has come under the radar of the regulatory
authorities in many countries for its exclusionary tactics and its pricing
practices; but of all, its case with AMD was far more serious with a significant
financial implication, and hence it had bent a bit with AMD.

If we look at the larger impact of the case, for AMD it has got the much
needed respite; and for Intel it will not in any way significantly alter its
licensing and sales practices. Observers expect that it will be more cautious to
avoid major litigations in the future arising out of business practices and
matters involving patents.

Intel over the last few quarters has aggressively launched new chips on the
Corei series, and AMD is struggling to put forward its value in terms of how its
chips offer more performance compared to Intel. Most of the analysts aver that
the era of performance as the only key metric in a chip is blurring out, as both
AMD and Intel have reached a level, and their chips are capable of performing
varied computing tasks. The key then is pricing, rebates, licensing, and
managing the OEMs. For instance, the kind of co-marketing agreements chip
vendors have with PC manufacturers hold the key to more volumes. Intels huge
marketing budget naturally puts it in an advantageous position compared to AMD.

AMD, in contrast to Intel, is extremely small. But over the last two decades
it had challenged Intel on various fronts; and it has carved a place for itself
in the server space. As we look at the current market dynamics, AMD needs to up
its ante in the consumer PC sideon both notebooks and desktopswith more
innovative products that have smaller lead times from conception to hitting the
market. Some analysts also feel that AMD has to adopt a more aggressive attitude
for a market strategy in the emerging markets, where Intel has launched a range
of initiatives.

Shrikanth G

shrikanthg@cybermedia.co.in