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Pass The Chips
Consolidation and increased aggressiveness among IT giants may have led to corresponding pressure for exclusivity in some areas, but one market where the pressure may actually be easing a bit is at the very beginning of the IT supply chain.
Microprocessor giant Intel had its knuckles rapped hard by antitrust regulators in the European Union and elsewhere in 2009. The chip maker had to pay a $1.45 billion fine over a ruling by European Commission regulators that it had engaged in anticompetitive marketing practices to the detriment of rival Advanced Micro Devices (Intel is appealing the May 13, 2009, decision).
It’s silly to think that the EU ruling or a U.S. Federal Trade Commission complaint and other legal proceedings have put any dent in Intel’s desire to win every bit of business for itself and itself alone. But there’s a sense among industry sources that Intel these days is walking a very careful line so as not to give the impression it is leaning too hard on OEM and white-box partners.
After all, the EU ruling explicitly found that Intel pressured computer manufacturers and other partners with rebates that hinged on whether a company’s product mix was almost entirely Intel-based and, in some cases, exclusively Intel-based. An antitrust complaint filed against Intel by the New York Attorney General last November detailed communications between Intel executives and their counterparts at Dell, Hewlett-Packard and other companies that raise serious questions about what Intel did to pressure partners for exclusivity and the large amounts of money it was allegedly willing to pay for it.
In the white-box channel, it’s been tougher to get a bead on how much Intel ever threw its weight around to achieve exclusivity, if the chip giant did indeed do that with smaller partners. At the time of the EU ruling, Todd Swank, vice president of marketing at Northern Computer Technologies (Nor-Tech), a Burnsville, Minn.-based custom-system builder, called the accusation that Intel misused its rebate program “hooey.”
“AMD and Intel have similar programs,” said Swank, whose company does business with both chip makers. “Both give rebates to go after specific products. But to give money to not do something -- I’ve been doing marketing in the U.S. for 10 years, and I’ve not seen anything like that.”
On the other hand, another system builder who asked not to be named said Intel had been known to “strong-arm” system builders. Interestingly, that system builder also said that in recent months Intel has “gone out of its way to be more channel-friendly.”
One key player in all of this that appears ready to accept that Intel knows its bounds when it comes to pursuing exclusivity is AMD itself. The smaller chip maker settled its own antitrust suit against Intel last year with the provision that Intel not engage in unspecified, anticompetitive “business practices.” Of course, now another Intel rival -- graphics chip maker Nvidia -- has its own legal beef with Intel, so all of this may be far from over. —Damon Poeter
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