Intel Gets Start of Antitrust Backlash from OEMs

[enigma067]

Intel Gets Start of Antitrust Backlash from OEMs

By Erik Sherman | Jan 4, 2010

A recent announcement that Lenovo would use CPUs from AMD (AMD) in a couple of its ThinkPads rather than chips from Intel (INTC) is the beginning of the price the chip giant could end up paying for its alleged anticompetitive activities: OEM customers shifting their orders.

In two separate statements, Lenovo said that it would use AMD chips in the ThinkPad X1003e ultraportable as well as the 13-inch ThinkPad Edge series, which is aimed at small- to medium-sized businesses. This is the first time that the ThinkPad brand, originally owned by IBM, will have used non-Intel chips:

An ultraportable PC positioned between a notebook and a netbook, the ThinkPad X100e can be equipped with AMD’s Athlon Neo single-core and dual-core, as well as the Turion dual-core processors. The ThinkPad Edge model, the smallest of three offerings in this product family and targeted at small and midsize businesses, may be paired with dual-core AMD Turion and Athlon Neo processors. The 14-inch and 15-inch ThinkPad Edge versions will still be powered by Intel’s Core 2 Duo chips.

Before you say, “But those are the small systems,” remember that the smallest systems, like netbooks, are the ones whose sales are really growing. To put it differently, AMD may not be in the prestige machines, but they’re going into the ones that may get the greater volume sales.

Starting in mid-November, I began noting that the upshot of all the antitrust activity focused on Intel would be customer defections:

PC vendors get completely wary of being sucked into the investigatory void and start shifting a significant portion of their purchasing to AMD. Forget fines and forget legal fees. That’s going to be the real price tag for years of allegedly using money and influence to keep a competitor constrained, and it will be a number with a whole lot of zeros.

I think the Lenovo switch is the first sign of that real price tag. Who knows how large a card it will need to be to record all the potential long-term loss for short-term gain?

Image via stock.xchng user MeHere, site standard license.

http://industry.bnet.com/technology/10004584/intel-gets-start-of-antitrust-backlash-from-oems/

 

[jsc]

If this is the "start" of oem backlash, we should see a notable increase of AMD's marketshare in six months.

Will we?

 

[Guest]

Depends on what you mean by notable.

AMD are basically now selling every cpu they make but then again more cpu's are being bought.

You won't see a really 'notable' increase (if by notable you mean intel losing up to 10% share or so) until the new fabs are finished and AMD can really flood the market with cheap bulldozer parts.

 

[roofus]

If they make it into the Lenovo T series, that is quite a statement.

 

[theholylancer]

Errrrrrrrrr

IBM and AMD are kinda linked at the hips (IBM Roadrunner, that initiative they started a few years back, etc), when DELL and HP starts sell them en-masse and not only as the "budget" only segment but in their mainstream/high end stuff (think gaming machines that would utilize one GPU + PII would sit below a I7-1366 with two+ GPU) then it would be a giant leap.

 

[Reynod]

Try AMD was linked to IBM's left small toe ... that might be more reflective of the actual relationship.

 

[theholylancer]

well amd was linked with IBM, and thats the foot in the door and i would imagine it would be harder for them to becomes something mainstream/high end with the other venders this quick

 

[qurious69ss]

Depends on what you mean by notable.

AMD are basically now selling every cpu they make but then again more cpu's are being bought.

You won't see a really 'notable' increase (if by notable you mean intel losing up to 10% share or so) until the new fabs are finished and AMD can really flood the market with cheap bulldozer parts.

Probably will see even more share loss for Amd, especially in the low to midrange with i3/i5 taking the midrange and Core 2 taking the lowrange. Oh and I'm not buying the part about them selling every cpu they make and here's why. A year ago their top deksktop cpu was selling for $300, 6 months $250 and today the top bin cpu is $200. Now I'm not a business expert but it seems to me that if the demand was so high for my product that I could sell everything I made then why would I be discounting the price for my product?

 

[Guest]

I seriously doubt it.

What you and most people don't understand is that Intel is guaranteed to lose market share next year, and probably a big chunk of it.

It doesn't even matter how good Bulldozer and Bobcat are, all that matters is AMD can flood the market with around 5 times the number of cpu's they are currently able to make.

And they will sell them at prices that intel shareholders will shudder at.

 

[qurious69ss]

I seriously doubt it.

What you and most people don't understand is that Intel is guaranteed to lose market share next year, and probably a big chunk of it.

It doesn't even matter how good Bulldozer and Bobcat are, all that matters is AMD can flood the market with around 5 times the number of cpu's they are currently able to make.

And they will sell them at prices that intel shareholders will shudder at.

No I guess I don't understand. How exactly are they going to flood the market 5X next year and how do you know the prices for these chips?

 

[roofus]

how is Intel guaranteed to lose market share? did something happen that i missed?

 

[qurious69ss]

Yes I too am very curious. An individual which such insight into the future of semis is quite remarkable. I'm half tempted into buying 10k shares of Amd stock now😉

 

[theholylancer]

Probably will see even more share loss for Amd, especially in the low to midrange with i3/i5 taking the midrange and Core 2 taking the lowrange. Oh and I'm not buying the part about them selling every cpu they make and here's why. A year ago their top deksktop cpu was selling for $300, 6 months $250 and today the top bin cpu is $200. Now I'm not a business expert but it seems to me that if the demand was so high for my product that I could sell everything I made then why would I be discounting the price for my product?

the low end strat seems to be empty atm, since as pointed out by you, their top bin i 200, while intel's top end is still 1000, and i would imagine that OEMs are going to notice value in the lower / mid end where the prices for i3/i5s are way to high for what they can put out.

the major issue with this is the IGP they now have on die, where intel is basically giving away a "free" component in their CPUs, thus locking in vendors and if they are gona build no upgrade grey boxes, those parts with IGP are going to attract attension.

that is, unless amd can come up with HD 43/45xx level performance in an IGP and just nuke the performance of intel's on-die IGP then I can see how that is possible, but as it sits now, intel's budget/mid range segment consists of riding on the success of their top end brand and people's misconception of the i3 brand.

 

[fazers_on_stun]

Last article I read, Intel increased its mobile marketshare during the last quarter, but of course much of that was Atom netbooks.

And there are laws against 'dumping' or selling product below cost in order to make up marketshare. I'm sure the FTC would be very interested to hear how a foreign-owned company like GF is colluding with AMD to dump below cost.

 

[Guest]

Yes I too am very curious. An individual which such insight into the future of semis is quite remarkable. I'm half tempted into buying 10k shares of Amd stock now😉

You should have done it last year when I told everybody what was going to happen to AMD shares. 😀

 

[roofus]

i dont believe they will dump product below cost but i also dont believe their marketshare rises 5x this year. i say they make significant inroads with OEMs and providing they deliver parts on time and in proper quantity they will continue to grow.

 

[Guest]

Last article I read, Intel increased its mobile marketshare during the last quarter, but of course much of that was Atom netbooks.

And there are laws against 'dumping' or selling product below cost in order to make up marketshare. I'm sure the FTC would be very interested to hear how a foreign-owned company like GF is colluding with AMD to dump below cost.

Who said anything about selling below cost?

You know fine well that intel are selling cpu's to idiots at WAY above cost. AMD can sell chips at much less and make a profit.

With a smaller process, a new fab coming online within 2 years and global buying up everybody else, AMD will basically never need to worry about meeting demand.

Think about what they did to Nvidia. They couldn't win on perception, they couldn't charge the same prices. So they priced Nvidia out of the market instead. You cannot deny it was an absolute masterstroke and perfectly engineered.

Intel is next, and AMD is going to do the same thing again. Of course intel are huge and they can see it out, but they will lose a large chunk of marketshare and probably a lot of profit in the process.

 

[qurious69ss]

the low end strat seems to be empty atm, since as pointed out by you, their top bin i 200, while intel's top end is still 1000, and i would imagine that OEMs are going to notice value in the lower / mid end where the prices for i3/i5s are way to high for what they can put out.

the major issue with this is the IGP they now have on die, where intel is basically giving away a "free" component in their CPUs, thus locking in vendors and if they are gona build no upgrade grey boxes, those parts with IGP are going to attract attension.

that is, unless amd can come up with HD 43/45xx level performance in an IGP and just nuke the performance of intel's on-die IGP then I can see how that is possible, but as it sits now, intel's budget/mid range segment consists of riding on the success of their top end brand and people's misconception of the i3 brand.

I see no issue with IGP when it's targeted for business PCs as a matter of fact its pretty much standard already (for business pc) except that it is now on a single package as is the northbridge. These i3/i5 are perfect for that market and don't forget about Core 2. Remember >90% of cpus are not sold alone but as a system by the OEMs to people who are as likely to change their cpu as they are to change their car's engine. For these people Core 2 is still very viable product.

 

[Guest]

i dont believe they will dump product below cost but i also dont believe their marketshare rises 5x this year. i say they make significant inroads with OEMs and providing they deliver parts on time and in proper quantity they will continue to grow.

That's not what I said, I said AMD will basically be in the position to make 5x the number of cpu's they currently can. Fab 2 will be ready around the end of 2011, thats another whole fab for AMD.

I'm making an assumption here too, that assumption is AMD will pull back from creating large cpu's with a lot of inefficient cache, and instead go smaller and smaller with each new process (32nm and 22nm etc).

It all ends up with a lot of cheap cpu's. Much more than they can currently make, and much cheaper too. You should read up on their sweet spot strategy, it makes a lot of sense.

 

[qurious69ss]

You should have done it last year when I told everybody what was going to happen to AMD shares. 😀

Yes I did miss out, but this time with your insight I hope not to make the same mistake. So, please tell us how Amd will be able to produce 5X more chips and at really low prices.

 

[Guest]

I just did.

 

[theholylancer]

I see no issue with IGP when it's targeted for business PCs as a matter of fact its pretty much standard already (for business pc) except that it is now on a single package as is the northbridge. These i3/i5 are perfect for that market and don't forget about Core 2. Remember >90% of cpus are not sold alone but as a system by the OEMs to people who are as likely to change their cpu as they are to change their car's engine. For these people Core 2 is still very viable product.

and there is the vendor lock in i was talking about, it was possible for c2 to have ati or nvidia IGP that was more powerful than what intel offered, now it is still possible, but vendors are wasting a resource that is handed to them when they do choose to build something like that.

remember the majority of pcs sold are home use pcs, and those guys won't have a clue about what the heck is going on, and chances are this is going back to the days where PCIE slots will disappear, and you can't upgrade unless you buy new. be it a new cpu with a better IGP or a new computer period. they are making things "simpler" to understand, that is throw money at intel or the OEM whom throws it at intel and you get better performance.

 

[Guest]

I don't see it being a huge issue right now holylancer, not with the ludicrous prices of the Clarkdales.

If the prices had to drop substantially then it might become an issue.

 

[qurious69ss]

That's not what I said, I said AMD will basically be in the position to make 5x the number of cpu's they currently can. Fab 2 will be ready around the end of 2011, thats another whole fab for AMD.

I'm making an assumption here too, that assumption is AMD will pull back from creating large cpu's with a lot of inefficient cache, and instead go smaller and smaller with each new process (32nm and 22nm etc).

It all ends up with a lot of cheap cpu's. Much more than they can currently make, and much cheaper too. You should read up on their sweet spot strategy, it makes a lot of sense.

Wait a minute, you mean to tell me that you are referring to GF's Malta fab that is suppose to come online in 2012 and won't have any chips till 2H of 2012? This is a foundryright, so they probably will be making chips for a bunch of other companies as well unless your sources say that they will be starting 50k wafer starts a week then it's going to be tough pushing out all those cheap chips. I guess I'll wait a bit longer before I invest especially since you are also assuming that they will be making smaller chips because they are going to smaller node just because it's smaller.

 

[theholylancer]

well to OEMs it is an issue, i'm sure they can now sell every chip set at a cost previously un-though of or at a lvl that is like the subsidized illegal prices because the heavy cost hitters are on the CPU it self, which you buy in whole.

the ludicrous prices of the clarkdales to retailers could mean a lot less cost in a OEM situation when every other component is marked down across the board since the CPU does so much.

The only people paying double are those going low end and with a low/mid range discreet card, or manuf whom wants ati/nvidia next-gen IGP, and intel would still win because they sold one more CPU

AMD needs to act fast and push out some good IGPs or else intel can now make money no matter where it goes because many of these vendors are intel locked, and they just gave them a more compelling reason to stay intel locked.