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Intel's art of gentle AMD persuasion misfires

Opinion Loneliness of the long distance phonecaller
Sat Apr 26 2003, 14:03
IT'S NOW EMERGED that Intel attempted to "persuade" Opteron vendors that attending the conference might not be in their firm's best interest.

(See Intel strong armed vendors at AMD Opteron launch).

This is not the first time Intel has engaged in such activitities, and unfortunately it's merely another link in a long chain of events. We've seen the fine folk over at INTC cut down balloons, offer seminars on AMD's processors, spread FUD every way they can over its competition, and lean on motherboard manufacturers not to ship competitive products -- most recently with Via -- but also three-and-a-half years ago with the launch of the Athlon.

For quite some period of time Intel also heavily hyped RDRAM and discounted SDRAM as a future memory standard, putting tremendous pressure on OEMs and motherboard manufacturers alike to support this new type of RAM. When major secret stock deals were uncovered between Intel and Rambus not that long afterwards it didn't take a genius to put two and two together.

Considering how many times it's attempted to use this strategy, and how many smart people work for the company, you'd think Intel would've realized by now that it mostly doesn't work. Athlon motherboards shipped anyway, and with ever-increasing visibility, the market vehemently rejected RDRAM, AMD's model numbers have been accepted and do not cause the confusion Intel attempted to "prove" they would, and Opteron is selling. Only where Via is concerned has Intel seen true results from its aggressive squashing of a competitor.

The problem with a strong-arm approach to computing is that the engineers and nerds that make up the core of technical buyers tend to strongly disapprove of what they view as "slimy" marketing. Marketing efforts are typically seen, at best, as a necessary evil, and at worst as the lies of a company that cares only about their profit line. A company's perceived image and the goodwill it's generated in the community can be tremendous commodities.

There's also a definite taint of bad sportsmanship about the entire deal. Its not as if Intel's the little player on the block with tight profit margins and no income, and while competition is competition there does come a point when a situation stops looking competitive and begins to look petty. Perhaps most significantly, however, is the resentment such strong-arm tactics create in manufacturers and channel distributors who greatly resent being told how to run their businesses.

Lest you think Intel's practice in such matters is limited to its channel partners, the company maintains a very similar policy of "discussing" reviews with journalists. Intel will never say you were wrong — only that you "misunderstood" the situation, that your review is "incomplete" and that you aren't "seeing the big picture." A list of recommended benchmarks, testing situations, and criteria for measuring performance will quickly follow, along with exhortations of Santa Clara's willingness to work with you to make sure your reviews are "fair." The reason such tactics work is because they sound completely reasonable when presented a certain way — but the constant undertone throughout the conversation carries a definite threat of "or else." The implied meaning of such a conversation typically runs like this.

"We don't like your review because we feel it was too harsh. Whether or not we have any basis for this opinion we have called you up to inform you that you will cease and desist from reviewing our products harshly. If you used benchmarks other than the ones we recommend, we will be questioning why you use them and what value you think they have. If you don't agree to tow the Intel line more closely in the future you will find yourself "accidentally" forgotten when our next NDA launch comes up."

Of course, no company likes a negative review of their products, but certain companies are willing to tolerate statements of fact much more than others. Intel, of course, is not the worst at this sort of behavior — both Apple and Microsoft come to mind as companies which are more draconian when it comes to their product lines and journalistic freedom to cover them — but ultimately it's not the company employing the tactic that matters, it's the tactic itself.

Attempting to persuade your buyers or vendors into moving in a direction they don't wish to go, even if successful in the short-run, will fail in the long. Intel may have put sufficient pressure on Solectron not to attend the Opteron launch, but I guarantee Solectron isn't sitting around thanking Intel for such a maneuver. Alienate your customers too much and treat them too harshly, and you'll find them jumping ship when a different solution comes along. Much of the success of Linux may be due to the simple fact that many people are fed up with dealing with Microsoft, the company's ever-rising prices, and its arrogant attitude in the overall market. Now that a different solution is emerging, potential buyers are evaluating it — and that makes Redmond very, very nervous. Microsoft hasn't focused on giving customers every reason on earth to stay MS customers, it's focused on getting every dime out of them they could. It may turn out to have been a very bad strategy.

If you ever want a crystal-clear example of how badly the market can punish a company who it believes is unfairly attempting to strong-arm the market, look at Rambus. Whether you feel the company's attempts to take over the entire DRAM industry by courtroom fiat were based in fact or in the lawyer-driven greed of a patent-driven company, there's no denying the fact that community response to the maneuver was negative in the extreme.

The bottom line is that strong-arming customers, vendors, and channel partners doesn't work, it never has, and it never will. It may, at best, force them into line in the short-term, but in the long-run people will remember the occurrence, and it won't be fondly. µ


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