Intel's Price War Tactics Might Benefit AMD in the Long Run

Just as Intel has regained much of its lost momentum in dominance of the microprocessor market, the European Commission (EC) accused Intel of alleged monopolist acts of anticompetition. Meanwhile entirely by coincidence (I'm sure) as Intel is facing these new legal issues, AMD announced upcoming processor plans designed to create a more competitive market.

As Intel and AMD continue to fight over market share, the variation in processor prices will continue to affect computer makers and retailers. As the biggest computer sales season arrives with the back to school shopping season, manufacturers and retailers alike are in a frenzy to adjust to the right pricing formula.

The European Commission allegations suppose Intel's renewed momentum in the market against AMD was based on three monopolist tactics:

First, Intel had provided 'substantial rebates' to several OEMs under the condition that they buy their microprocessors exclusively from Intel. Secondly, Intel paid OEMs if they delayed or canceled the roll-out of products based on AMD CPUs. Thirdly, Intel has offered microprocessors to server OEMs under cost in order to block the competitor.

Yet all three of these were considered acts of antitrust by the EC, who believes that Intel had an overall anti-competitive strategy designed to hurt consumer choice, which may lead to even higher fines. Because Intel is confident that the microprocessor market segment is functioning normally and that Intel's conduct has been lawful, pro-competitive and beneficial to customers, AMD has prepared to compete more aggressively in an ever-more hostile microprocessor market. As AMD works out its road map by revealing an upcoming eight-core processor and an asset light strategy, Intel is eager to finally have a chance to respond directly to these latest anti-trust allegations.

With priorities directed at different strategies of the business, Intel is concentrating on a competitive strategy, while AMD is concentrating on growth strategy. Intel's alleged plan to manipulate the market to force competitors to play by its rules, was reinterpreted by AMD in a push for top-line growth, while monetizing assets to build cash and shed non-core elements of its value chain.

The changes that took place in the market have proven essential to AMD's plan, as it required them to figure out how to produce top-line products even as they cut costs in order to compete with a dominant hegemon. The ruling on Intel's anti-trust claims will set the tone for the AMD/Intel rivalry. Because AMD has prepared themselves to compete in a more competitive market, they will be able to create top of the line processors and continue to cut prices if in fact Intel is guilty and a guilty ruling would require Intel to change its ways, making AMD the brand of choice.