Cashing in the chips

14-05-2009

by Ralph Averbuch

One billion euro fine highlights Intel's murky past practices but will the lesson be learnt?

Intel is a very successful company with an immense reputation. Of course, it's also got immense amounts of money from being the dominant (by some margin) supplier of microprocessors to the PC market. But the recent ruling by the European Commission that Intel had been carrying out anticompetitive practices, principally against AMD, has resulted in a EUR1 billion fine. That’s the amount the commission has judged was lost in savings to the European consumer of PCs by Intel blocking competition. The company offered rebates to the PC makers if they purchased between 80pc and 100pc of CPUs from Intel. For retailers, Intel paid out to discourage sales of other CPU makers’ kit. In practice the fine is a mighty big number but the practical effects on Intel are likely to be nominal, other than a somewhat tarnished reputation. And that’s the tragedy of the situation. Intel needs competition to bring out the best in its teams of researchers and chip designers. By simply trying to stifle competition at the retail and wholesale end of the supply chain, all the great technological strides it has made are sullied. Let’s hope that from now on Intel focuses on how to remain the dominant player in CPUs through being the best it can be as a cutting-edge 21st century R&D driven operation. And let’s hope that those who were the brains behind this underhand business practice, if they aren’t already gone, get kicked out without further procrastination.

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