by Laurianne McLaughlin

NY Goes After Intel, But Why?

Jan 14, 20085 mins
Data Center

New York state Attorney General Andrew Cuomo announced late last week that he’s issued a subpoena and started an investigation of whether microprocessor giant Intel ran afoul of state or federal antitrust laws as it priced and marketed its chips. Some reporters promptly worked themselves into a lather about this story, re-hashing the now famous antritrust suit against Microsoft and asking if Intel would be the next tech titan to suffer through a long antitrust trial. As someone who closely covered Intel and its upstart rival, AMD, throughout the late 90’s, I’m scratching my head about several questions related to this development. 

First of all, why is it Cuomo and New York state going after Intel? It’s not the Federal Trade Commission. It’s not California, the home state of both companies. It’s New York.

This simply smacks of politics to me. Grab some national headlines before you make your next run for office. Raise your profile. Get consumers riled up about frustrating computers? Maybe some of each. As one colleague pointed out to me, perhaps it’s not surprising that Cuomo’s taking a political cue from former New York state attorney general Eliot Spitzer, who certainly took a broad view of what a state AG’s office should pursue, and mugged to many a TV news camera about those cases, prior to his successful run to the New York governor’s office.

Second, let’s keep this possible Intel case in perspective. Sure, Intel faces some other investigations right now, in Japan, Korea and the European Union; there’s also a pending civil case that AMD has filed in Delaware. But one step at a time: As Businessweek and others point out, the case that Cuomo’s discussing won’t be easy to make.  

Technology users had good reason to be quite interested in the outcome of the Microsoft antitrust case. But I’m not so sure that the Microsoft and Intel situations compare well. What’s in this Intel investigation for corporate IT buyers and consumers?

Even theoretically, would an antitrust ruling against Intel, if indeed New York was to bring a formal case, change much in today’s chips market or PC market?

Fact is, AMD has made huge progress against its tough-as-nails rival during the last few years. 

While back in the 1990’s, you could find AMD chips only in PCs from smaller companies, you can now buy AMD-powered PCs from the biggest of the heavyweights, including HP and Dell.

And while AMD fought long and hard for respect, by 1999, AMD had proved in the press and in the marketplace that it could deliver competitively priced, high-performing products.  

Today, PC chips deliver more raw computing power for less money than we could have imagined in the late 90’s, when I covered the intense race between AMD and Intel to power a 1GHz PC. And the bottom line is simple, and sweet: Even if you buy one of the least expensive, sub-$500 PCs available today, whether it has AMD or Intel inside, you will take home more processing power than most of your productivity software will require.

We all have tons of unused CPU horsepower under the hoods of our home and work PCs these days. (That’s unless you happen to be a hard-core gamer or video editor; those tasks will always gobble as much CPU power as you can throw at them.)  

The software market has yet to come up with a killer app that drives hordes of people to the store to buy a new home or work PC because the current machine can’t keep up. Apple came up with a killer service that drove hordes of people to buy iPods; no software company has come close to that success for years.

Chip prices have not kept the PC market from innovating to deliver low-cost machines. Other components, such as displays, remain fixed costs that prove harder to deal with when you’re say, a notebook PC maker designing budget-minded models. 

Furthermore, it isn’t likely that chip prices are going to drop drastically any time soon, no matter what happens in a case of this sort against Intel. This is a capital-intensive, technically-complex business, highly dependent on scarce intellectual property and engineering gurus. The two main players have already both squeezed much efficiency and cost out of their processes.

I don’t think PC end users have as much at stake in this case as they did with the Microsoft case. AMD does have much at stake, on a business level, since it is always advantageous to put your rival on the defensive. However, I think AMD has shown the will and aptitude to continue ably battling Intel, regardless of what happens in the courts.  

Of course, technology stock analysts say that Intel as a business does not need an antitrust case on its plate right now. But as for home and corporate PC buyers, I just don’t see that a case against Intel of this kind will change your life much.

Except if you’re an Andrew Cuomo fan, rooting for his next political run.