Gutless PC vendors terrified by nightmare AMD Intel clash

THE PROSPECT OF seeing IBM's Sam Palmisano, Dell's Michael Dell, ex-HP executives Carly Fiorina and Mike Capellas all take the stand when AMD's antitrust case against Intel finally starts is one that, we must admit, is a spicy thought indeed.

That mouth watering confrontation may well come to pass if AMD gets its way, because these people, along with hundreds of executives at PC vendors, distributors and retailers are named as "custodians" of documents and emails on which the firm's case will stand or fall. And, as we reported over the weekend, if firms refuse to cooperate with AMD's discovery process, the chip firm will issue subpoenas to force the hand of those that are unwilling.

In truth, and as we've written many times in many different places over very many years, it's an open secret that Intel plays hardball with its customers. It doesn't just play hardball with customers either, that grace and favour can be extended to journalists as well. But don't think that it's not tough on its own employees either. Its policy of constructive confrontation is renowned in human resource departments far and wide.

Journalism? "The trick is not giving them [Mark Hachman and Mike Magee] the special access. We've had some luck with the tough love approach, telling them they'll get more access to us if they are more objective and less sensational/negative in their articles."

And "constructive confrontation"? This is an HR technique inside Intel which forces subordinates to take their bosses to task for their failures or shortcomings, a process that inevitably frightens the heck out of both parties and fosters internal office politics which makes many organisations look like the Church of England at sleep. This is not to say that we're talking about 80,000 plus terror stricken Chipzilla employees - not that we've ever met that many. There have been very very few Intel employees we have met over the years that haven't been personable, intelligent and friendly individuals. That's not the point.

It's just that Intel is built like a machine, works like a machine, and can often act as if it is a terminator. On that mechanism is based its vast profits and its success, fuelled by the need to relentlessly drive chip processes and profits forward so it can build the $3 billion fabs it needs to, to stay ahead.

So what about the allegations AMD made about PC vendors, distributors and retailers last week? One senior executive at one of the major distributors that was named in one of AMD's subpoenas last week told the INQ, just a few weeks ago, that he thought it was deplorable the way Intel dealt with its customers.

He mused whether any such supplier-customer relationship existed in any other sphere of commercial life. Imagine, for instance, if you went to buy a gross of spark plugs from an automotive manufacturer, and he said you could only have them if you guaranteed not to buy any spark plugs from its competitor. It's laughable.

But, however much distributors - caught in that hard place between dealer and vendor - may protest, they are faced with the problem that Intel is the market leader. A lot of their customers want to buy Intel products and buy into the entire soft dollar deal that the firm offers.

The vendors are a completely different kettle of fish. Like the disties, they will, off the record, moan constantly about Intel's grip on the marketplace. They seem to forget that they have a grip on the marketplace too. They're allured by the Intel marketing dollars, which can make a difference to their profitability during a quarter, but jellyfish seem to have more spine and guts than this lot. AMD alleges that quite a few of this feeble lot have been alternatively threatened with the stick and attracted with the marketing dollar carrot. Are they donkeys with the spine of jellyfish?

The last time we recall any of the PC vendors standing up to Intel was over ten years ago, when then CEO Eckhard Pfeiffer outright accused the firm of competing with its customers by introducing the Intel Inside brand. We were sat next to Eckhard Pfeiffer at the Etre round table when he launched into one against Hans Geyer, then joint European MD. We were in a position to see his notes, which showed he had then several alternative chip architectures to aid him in his attack - MIPS, the DEC Alpha, and AMD. The silence in the weeks following his attack was deafening. His CEO colleagues at the then more numerous community of PC vendors unanimously decided to keep their mouths shut, even though many of them agreed with his sentiments.

From time to time, since then, many of the PC vendors have made half hearted attempts to "show their independence" by dabbling with the opposition. But they were frit. IBM even sold Cyrix microprocessors under its own brand into the marketplace, but never showed the guts to actually use one of these chips in its own PCs.

Dell is a different case altogether. We have sound reason to believe that Intel fears Dell because of its position as number one Chipzilla distributor worldwide. Dell makes noises from time to time about how groovy AMD chips are, but so far has stayed loyal to its supplier, no doubt because of preferential prices and a shedload of cooperative marketing money. We sort of get the feeling that the recent deal Intel struck with Apple was a demonstration to Dell that the last thing the chip giant wants is a customer who won't play ball.

By a steady process of attrition, Intel has gradually worn down its semiconductor opposition with only AMD and Via now making X86 microprocessors and unable to really break big time into a market dominated by Chipzilla.

It will be up to a judge or a jury to decide whether the allegations AMD makes against Intel are true. We'll have to wait for that day to dawn. Mind you, the European Union's investigation into alleged antitrust practices will appear before the US case comes to court, if that case ever comes to court. In the meantime, we'll watch for developments in the US courts, and pray that the day will dawn when high flying witnesses like Carly Fiorina and Michael Dell will have a chance to have their 50 minutes of fame in antitrust history. µ