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AMD slings more mud at Intel
An AMD sponsored study claims that the Intel monopoly has cheated the world out of more than $60bn over the past decade.
Quite conveniently, the study notices that only four firms have exceeded 16 per cent in economic returns over the past decade (that is, profit corrected for the cost of capital, in other words: profit that should be considered excessive. And if the forces of supply and demand were functioning properly, this should be a short term blip on the economic radar).
Those four are Coca Cola, Microsoft, UST (a tobacco and liquor seller) and Intel. You don't have to tell anyone that tobacco maker are crooks, and in UST's case, the firm has even been subject to antitrust accusations, just like Coca Cola and Microsoft.
The chip maker will use the study as evidence in its anti trust case against Intel. From what has been published so far, there are no smoking guns – at least not as many as there were in the case against Microsoft. AMD needs all the help that it can get and a study like this one would never hurt.
But surely a judge will see the apples to oranges comparison going on here. You can't compare typical profit margins for sugared water with those of a semi conductor.
Take a look at 10 year net profit margins for some market leading high tech vendors, and there Intel's a-typical market lead is all but gone.
In AMD's view, Oracle should be put to the anti trust test first: the database vendor over the past 5 years achieved an average net profit margin of 24.34. Cisco comes in at 19.24 per cent. Intel suddenly looks rather average with its 18.14 per cent.
Intel described it as "just another day working in the coal mine." But we're getting increasingly convinced that Intel and AMD are playing in a sand box, slinging mud like all toddlers do.
Spanish
I think you are right in noting that profit margins among tech leaders do tend to set the curve among all industries, and that there are legitimate reasons for this. After all, we are in the middle of a technological explosion of sorts that’s been going on for at least ten years, and until we reach a kind of saturation point of stability (assuming we do), the demand is going to be high enough such that the trend will continue. However, there are also reasons to believe that profits like these demonstrate that the free market model we’ve been using for three hundred years may not be working in the technological age in which we live. Consider the case of MS. It seems pretty clear that they aren’t producing a product that is superior to everything else on the market, nor is it cheaper. Under traditional market rules, they should have gone under long ago. Yet they continue to thrive, in part because, getting into the market first in the computer world can allow you to own that world, or at least your little sector of it. So, while it may not be fair to compare Intel’s profits to those of traditional companies, it also seems clear that perhaps simply letting them operate with a “free hand” under capitalist economics may not be appropriate either.
Posted by: baby | August 3, 2007 3:48 AM