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Intel Inside . . . a Glass of Pepsi (Or, D.F.ís New Antitrust Rules)
tough to be Intel. OK, not really. OK, not at all.
owning the computer chip market is bound to come with a few small
annoyances. Like being fined $1.45 billion by the European Union, not to
mention $21 million by South Korea, for being too successful.
sells 80 percent of all the computer chips in the world that are procured
and used to make computers. I donít think they even bother telling you
ďIntel InsideĒ anymore, since you pretty much just assume that. Intel has
one competitor of note, Advanced Micro Devices Inc., and itís hard to get
traction in any market when itís so thoroughly dominated by one established
According to the EU, Intel is making it too hard Ė as in, unfairly so
Ė by using its superior cash position to offer enticing rebates to its
customers, provided, of course, they donít buy too many chips from AMD.
may or may not break the rules. And it may or may not harm consumers,
although itís hard to see how when AMDís presumably superior chip, launched
in 2003, inspired Intel to come out with a superior product of its own. Even
a competitor who controls less than 20 percent of the market is capable of
lighting a fire under the leader if its product is good enough.
Besides, giving away free products to gain or maintain market share is
hardly the exclusive domain of the industry leader. AMD tried it too. It
tried to give one manufacturer a million chips for free, but the
manufacturer took a pass because it would have had to forfeit its Intel
this what Iíve been doing wrong? I keep expecting my clients to pay me.
Maybe if I turned around and gave their payments right back to them, or just
gave away my services for free, I could so firmly own the market, I could
get fined billions of dollars Ė not that I would have billions of dollars,
because Iíd be working for free.
the outrage of international bureaucrats knows no bounds.
rate, itís clear to me that we need to take a fresh look at some of these
antitrust rules. If the industry leader is getting fined for giving rebates,
while the challenger is trying to give away stuff for free and getting no
takers, something is seriously whacked here. So Iíd like to propose some new
anti-trust rules that will at least have people acting a little more
rationally, if not making any money, since we apparently no longer encourage
that sort of thing.
From now on,
computer chip manufacturers must conduct the equivalent of The Pepsi
Challenge before taking an order. Itís simple. Pour a glass of Coke. Pour a
glass of Pepsi. Put an Intel chip in one. Put an AMD chip in the other. Wait
a few minutes for the flavor to be absorbed, then have the customer take a
drink. Whichever one tastes better determines the chip he or she will buy.
If the customer canít decide, the company buys the Meathead chip inside the
Royal Crown Cola.
You know how
computer chips are really, really small? Try this. Go to the home of your
customer companyís CEO. Toss the chip up high right in front of the CEOís
cat. If the cat likes it as a toy, donít permit the CEO to buy the chip.
Itís too big. If the cat eats the chip, donít sell the CEO the chip. Use the
money to buy a new cat instead. Or, put one Intel chip and one AMD chip in
the catís food. The last one left in the bowl is the one you have to sell
the CEO. Why? Because itís Europe! It makes as much sense as anything else
You want to
make it fair? Have both companies go before the EU for bailouts. You say
they donít need bailouts? Increase their fines! Eventually, theyíll
come hat in hand. Then youíve got control of the industry, and you just make
a rule that says every purchase of computer chips must be half Intel and
half AMD. Fairness abounds!
could just let them fight it out. It would be one thing if they were getting
together and fixing prices. That would clearly hurt consumers, and
would need to be stopped. But flogging Intel for using its strength to
control the market doesnít really help consumers.
see where Europeans would be a little sensitive about the notion of some
super-strong power rolling over them all, but itís too late now, and Neville
Chamberlainís infamous piece of paper wouldnít have been any more effective
if heíd saved it on a computer chip.
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