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Technology Stocks : Advanced Micro Devices - Moderated (AMD) -- Ignore unavailable to you. Want to Upgrade?

To: Tenchusatsu who wrote (255124)	8/3/2008 7:03:59 AM
From: mas_	Read Replies (4) \| Respond to of 275872

Mafia's sins listed mercurynews.com • Offering a high-ranking Tech Data executive a $1 million bribe to stop doing business with AMD. When the executive turned the money down, AMD claims, an Intel representative responded, "How much would it take?" • Pressuring Hewlett-Packard "to consider firing" an HP executive involved in a proposed deal in which AMD promised HP 1 million free chips to gain access to its business computers in 2002. Consequently, HP took only 160,000 of AMD's free chips. • Withholding delivery of server chips that Compaq "desperately needed" in 2000 after Compaq did business with AMD, prompting Compaq Chief Executive Michael Capellas to stop buying AMD chips, saying he "had a gun to his head." • Threatening Acer with "severe consequences" if it went ahead with its plan to promote AMD's new Athlon64 chip in 2003 while delaying payment of at least $15 million it owed Acer. As a result, Acer withdrew its promotions for the AMD chip.

To: Tenchusatsu who wrote (255124)	8/3/2008 9:50:32 AM
From: Dan3	Respond to of 275872

Re: At issue are exclusivity deals, which others have confirmed is OK for a non-monopoly for not OK for a "monopoly" like Intel. Not quite the case. What's key is the 3rd party aspect. So if Apple makes a to sell iPhones to AT&T exclusively, it's OK. If Apple makes a deal to sell iPhones exclusively to AT&T it doesn't restrict Nokia's access to the cell phone market and (the key) it doesn't restrict consumer access to Nokia cell phones. While market share doesn't drive the issue, it is material. Apple has something less than 5% of the cell phone market - whatever they do is not going to affect consumer choice very much, either way. If Apple offers a discount to AT&T for selling 10% more phones next year, it doesn't block either other cell phone companies from selling, or consumers from buying, Nokia phones. But postulate a case where Nokia has 90% of the cell phone market. If Nokia offers AT&T (and all the other cell phone vendors) a marketing incentive program equal to 40% of the price of the phone for increasing sales by 15% (or whatever total sales growth in the industry is) over the previous year, then there is no room at AT&T (or anywhere else) for the iPhone. It likely wouldn't be a pure 40% price cut, it would be a combination of price cut, advertising co-op dollars, and "free" tied in parts like batteries, ear pieces, discount terms, etc. If AT&T offers the iPhone, (which will amount to only a few percent of sales, the first year) their overall costs will go up by 40%, while their competitor's costs will not. AT&T would be screwed if they offered the iPhone, so Apple is effectively blocked from the cell phone market by Nokia's "quantity discount." The key is the 3rd party impact and denial of customer choice. At a few percent of the market, Apple's deal actually adds choice. But at 90% of the market, Nokia's deal blocks access to markets and denies consumers choice.

To: Tenchusatsu who wrote (255124)	8/3/2008 11:52:25 AM
From: fastpathguru	Respond to of 275872

At issue are exclusivity deals, which others have confirmed is OK for a non-monopoly for not OK for a "monopoly" like Intel. And of course, Intel is a "monopoly" simply because it has 75-80% of the market. Intel has not done anything that would be considered illegal if AMD did it. Actually, it's only Intel's market power that makes them even capable of abusing loyalty rebates. They have the uncontested marketshare that makes amortizing the cost of loyalty rebates across a large number of uncontested processors possible. AMD has to fight for all of its sales, while Intel only has to fight for a small fraction of its own. It can subsidize rebates, AMD can't. AMD couldn't use the technique even if it wanted to. A subsidy is the antithesis of competition on the merits, and it can buy exclusivity without translating into lower costs. And to an OEM on razor-thin margins, the subsidy is economically impossible to resist. fpg