Monday, September 28, 2009

The benefits of high supplier power

From today’s Merc:

At the heart of the European antitrust case against Intel are a series of once-confidential memos that provide a rare glimpse into the intense and at times acrimonious negotiations between the world's biggest chip maker and Hewlett-Packard, the world's biggest computer company.

Even a company as powerful as HP, the documents suggest, had to make business decisions based on how Intel would react. The Palo Alto computer company reportedly was so worried about threats from Intel that it dramatically scaled back its plans earlier this decade to sell computers powered by chips from Intel competitor Advanced Micro Devices of Sunnyvale.

And when AMD offered HP 1 million free microprocessors, saying it was a gift "no reasonable business partner could refuse," HP took only 160,000 to avoid Intel retaliation, according to the report unveiled last week by the European Commission.

HP declined a Mercury News request to be interviewed and Intel insists it did nothing illegal, calling the commission's findings "wrong as a matter of fact, law, economics and elementary fairness."
Of course, HP is not the world’s largest computer company — which has remain unchanged since the System 360 in 1963 (if not before). But it is the largest PC maker, and the rest of the story is pretty convincing.

Still, the allegations suggest that our local chip designer (no longer making chips here) is as predatory as Microsoft under Bill Gates.

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