Funny thing, AMD used to make chips for Intel. I can't remember the exact purpose of the chips but the ones my old job had were ICs with a little round see through thingy to the chip and it said Intel corp and made by AMD. Was kind of funny to think that years ago they used to help eachother and now they are fighting.
Ahh sibling rivalries.
As for your point about AMD being the only one you are right. No one to compete with then why work your butsts off? Thats any companies motto. Hey look we are the only ones so lets milk this for all its worth.
If you think back to then you might remember that AMD and Intel weren't exactly on good terms even in those days. AMD may have been just a second source in those days but they were able to consistently produce chips that would in many cases drastically outperform the ones produced by Intel. There has always been some speculation that it was Intel's anger over AMD's chips consistently having better performance that caused them to abruptly rescind the x86 license just before releasing the 386 processors.