The early verdict Thursday on the settlement reached between Intel and Advanced Micro Devices over several legal disputes, including major antitrust charges against Intel? A win for the industry, for AMD and perhaps even for Intel, which will pay AMD $1.25 billion as part of the agreement, said industry analysts and channel partners of the two companies.
In addition to the payment from Intel to AMD, the two companies have also ended a dispute over their x86 cross-license, with that arrangement extended another five years, and Intel also agreed to abide by a set of business practice provisions, which have yet to be detailed.
"The settlement is a win-win for both [Intel and AMD], although it may not have much effect on Intel's continuing governmental antitrust investigations around the world," wrote Jack Gold, principal analyst for J. Gold Associates, in an early analysis of the settlement Thursday.
Gold's opinion was that Santa Clara, Calif.-based Intel was now freed up from a major legal "distraction" to focus on competing with licensees of ARM chip designs in product categories like smartphones, mobile Internet devices and embedded systems. AMD, headquartered in Sunnyvale, Calif., was now able to move on from its "obsession" with Intel's alleged anti-competitive behavior and was also the recipient of "much needed cash with which it can complete its transition to a fabless semiconductor company," according to the analyst.
Sources at AMD expressed relief that the years-long litigation against the company's larger rival finally appeared to be over. One source who preferred not to be named said that while the antitrust portion of the settlement was getting the most attention, the more important result was the ending of the x86 cross-license dispute and extending of its terms.
That point was also highlighted by Kevin Jacoby, CEO of Rain Recording, a Ringwood, N.J.-based maker of high-performance audio workstations that partners with both Intel and AMD.
"I was really worried about the x86 cross-license dispute when I heard about it. That could have been disastrous," said Jacoby, referring to Intel's contention that its cross-license with AMD did not extend to Globalfoundries, the company created when AMD spun off its manufacturing assets earlier this year.
"I understand where this sense of relief is coming from, I'm relieved too," he said. "Rain works closely with both companies, so if they're mucking around with this legal stuff, there are fewer people at those companies working on the next great technological innovation."
Jacoby said Rain Recording valued having AMD as a supplier -- particularly when the company, which had long served a niche market of audio-visual professionals with high-end systems, was making a play for more mainstream customers a few years ago.
"There was a time when AMD really came to bat in helping us with taking our stuff to the masses. We wanted to branch out from just doing the big gigs, the Disneys and the Cirque du Soleils, and AMD was offering us more bang for the buck than Intel was able to do at the time," he said.
Another system builder partner of both chip makers, Joe Toste of Equus Computing, said it was important for Intel's partners that a crucial chapter -- if not the entire book -- had been closed on the litigation pressure Intel had been facing. Intel still faces legal battles with antitrust regulators in the European Union and in the U.S., where New York Attorney General Andrew Cuomo has filed an antitrust suit against the company.
Toste, vice president of market at Minneapolis-based Equus, said AMD had a fresh opportunity to improve its business with whitebox builders and system integrators in certain key areas.
"If AMD can mount a fighting portfolio on server technology, they could win some business from the customers that matter. Our AMD business is doing well on the desktop, but our [AMD] server business collapsed with the Dell deal from several years ago and it's never been the same," he said.
AMD signed a historic deal in 2006 to supply Dell with Opteron processors for the Round Rock, Tex.-based OEM's servers. Many AMD whitebox partners contended that Opteron supplies they had depended on were re-routed to Dell, leaving AMD's channel high and dry.
Toste and Rain Recording's Jacoby both agreed that one area where AMD was having notable success in the channel was with its ATI Radeon graphics products. That's good news for a company that for the past few years has suffered some brutal fiscal quarters, often due to write-downs associated with its 2006 acquisition of ATI Technologies.
"We really don't work too closely with Nvidia at the moment, and that's because of the one-two combo that AMD is able to provide with ATI's integrated and discrete graphics," Jacoby said.