Custom System Builders Welcome Intel's FTC Agreement

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Intel's antitrust agreement with the FTC to stop paying PC makers to not use competing products from rivals like AMD is good news for system builders who said such agreements have impacted their ability to compete with large OEMs, particularly Dell, over the years.

Intel on Wednesday signed a consent decree with the Federal Trade Commission (FTC) to stop those payments, among other restrictions, in a move that will govern the company's actions for he next 10 years.

The consent decree addresses an issue that has affected the system builder community for a long time, said Andy Kretzer, director of sales and marketing at Bold Data Technology, a Fremont, Calif.-based system builder.

When asked about the impact on system builders, Kretzer responded with a question of his own.

"You mean now that there are only five system builders in the world?" he said. "The damage is done."

Another system builder, who requested to remain anonymous, said the agreement helps the channel by providing a level playing field. "If one guy monopolizes the market, how can we compete?" the system builder said.

Large PC OEMs will probably be impacted more from the consent degree than custom system builders, the system builder said. "It was good in a sense for the larger companies because they made money for doing nothing," he said. "But it was bad for consumers because they had fewer choices."

Dell may be the PC OEM who most benefited from Intel's past behavior. Two weeks ago, Dell in an SEC filing said that it had received billions of dollars from Intel from 2003 to 2007 by agreeing to not use AMD processors and not disclosing such an arrangement. By fiscal 2007, the cash from Intel amounted to 76 percent of Dell's operating income.

That was the kind of behavior which really hurt the custom system builder channel, said another system builder who also requested anonymity.

"When it was going on, I knew it was bad," the system builder said. "But I didn't know it was that bad. When I saw Dell got 76 percent of its operating income from Intel, my jaw dropped. That's a huge impact to the system builder community."

Tim Beech, channel program manager at Howard Technology Solutions, an Ellisville, Miss. system builder attending Intel's Channel Alliance Summit in Hillsboro, Oregon, said he has never seen any evidence of unfair practices from Intel. "There has been no untoward practices with (regard to processor) vendor selection," he said.

Additional Reporting By Brian Kraemer

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