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The Intel Inside campaign wasn't just a consumer branding strategy. First and foremost it was a predatory marketing campaign that turned into exclusionary behav
by sblank 9y ago
The Intel Inside campaign wasn't just a consumer branding strategy. First and foremost it was a predatory marketing campaign that turned into exclusionary behavior. PC firms that used Intel chips and put Intel Inside on their PC's were given funds to use in advertising and were reimbursed for "marketing expenses". In reality these marketing funds were actually a subsidy/discount (some would say kickback) on Intel chips. As Intel's power grew they would only give the PC manufacturers rebates if they would buy 95% of their Microprocessors from Intel. If they used AMD or other microprocessors - all the Intel rebates would disappear. By the end of the 1990s, Intel had spent more than $7 billion on the Intel Inside campaign and had 2,700 PC firms locked up. By 2001 these rebates were running $1.5 billion a year.
Intel was sued in Japan (for offering money to NEC, Fujitsu, Toshiba, Sony, and Hitachi,) in the EU (for paying German retailers to sell Intel PC's only) and in the U.S. for predatory (pricing), exclusionary behavior, and the abuse of a dominant position (HP, Dell, Sony, Toshiba, Gateway and Hitachi.) The legal record is pretty clear that Intel used payments, marketing loyalty rebates and threats to persuade computer manufacturers, including Dell and Hewlett-Packard (HP), to limit their use of AMD processors. U.S. antitrust authorities have focused on whether the loyalty rebates used by Intel were a predatory device in violation of the Sherman Act. The European Commission (EC) brought similar charges and imposed a 1.06 billion Euros fine on Intel for abuse of a dominant position.
The sum of these efforts not only killed competitors but it killed innovation in microprocessor design outside of Intel for decades.
Ironically Intel's lack of innovation in the 21st century is a direct result of its 20th century policy of being a monopolist.
- davidf18 9y agoBut Intel did innovate: The processes for fabrication are ahead of all others. Also, they were the first to move away from the "higher frequency is better" to running lower power CPUs with more computation per clock cycle for mobile. IMHO, Apple should have moved to Intel when the IBM PC came out. The IBM PC used the Intel 8088 which ran Intel 8086 16-bit processor while using a cheaper 8-bit bus which could use the more mature and less expensive 8085 interface chips. The Apple II had only an 8-bit processor.
- tjoff 9y agoWhat? The processes for fabrication was surely because they maintained their monopoly and having money to buy the best tech rather than innovation. And, no, intel was the last to move away from "higher frequency is better". In fact, they were the ones that created that whole mindset since they were the ones that benefited from it. All because their Pentium 4 NetBurst architecture required high frequencies to remain competitive.
- davidf18 9y ago> "The processes for fabrication was surely because they maintained their monopoly and having money to buy the best tech rather than innovation." My first job was VLSI designer (GPUs) and I follow the industry. Intel is the innovator when it comes to fab. IBM has a fab (or just sold it) in Upstate NY, but they could not keep up with Intel. The Pentium M (Banias was the first processor) was developed in the Haifa, Israel design center and it is the first example (in microprocessors) of slowing the clock rate and performing more computation per clock cycle. This was released in March, 2003. Could you please cite examples of competitors releasing low TDP models before this? https://en.wikipedia.org/wiki/Pentium_M https://en.wikipedia.org/wiki/Pentium_M
- tjoff 9y agoWell, the Pentium M was just a refreshed PIII and was born out of necessity as the P4 was so disastrous on mobile platforms. AMD was way ahead of Intel at the time regarding IPC, the Pentium M was just Intel catching up to AMD, and had about the same IPC as A64 that was released the same year. But unlike Pentium M the A64 was a real performant CPU. Don't get me wrong, I loved Pentium M and I when looking at laptops there was no reason to bother looking at anything else at that time. But it was a parenthesis few even knew existed. It was more of a successful prototype proving that the (future) Core series had a good foundation. AMD didn't have as good fabrication, which is partly why they couldn't compete with Pentium M on power. But that's not what we are talking about either, because of the higher IPC the A64 smoked everything Intel had for years coming. Despite Intel having better fabrication.
- ykler 9y agoIt seems to me there is nothing inherently anti-competitive about requiring people who buy your component to advertise that they are using it (or, a fortiori, with incentivizing them to do this with discounts). But offering rebates to customers who by 95% of a certain kind of component from you does seem anti-competitive to me. That should probably be illegal.
- chinathrow 9y ago> In reality these marketing funds were actually a subsidy/discount (some would say kickback) on Intel chips. Some would say they were actually bribery.
- kobeya 9y ago> Ironically Intel's lack of innovation in the 21st century is a direct result of its 20th century policy of being a monopolist. That's not ironic at all. Monopolies are bad for innovation.
- ue_ 9y agoAnd we'd still have people saying that monopolies are only granted by the government, and that without the government, or with a small one, the Free Market(TM) would sort it all out.
- djsumdog 9y agoI suggest the book Debt: The First 5,000 Years. Graber shows that markets cannot exists without a state. (Even when anarchists argue about state-less markets, it's usually after a state has fallen and there are still state-like actors around).
- nindalf 9y agoApart from the predatory behaviour, the basis for Intel's monopoly is the hundreds of patents on x86 and it's instructions. Those patents are a government granted monopoly, by definition.
- simonh 9y agoTrue, but irrelevant to the issue of cartel behaviour. Granting limited monopoly rights to people for their own discoveries The can give net benefits to the economy in some cases. Such as patents encouraging investment in technology research. Simultaneously market monopolies established through predatory pricing and cartel deals can stifle innovation and harm customers. There is no single ideologically pure one true best answer in all cases. The real world just doesn't work that way.
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- flomo 9y agoNot to disagree with your point about monopolism, but "Intel Inside" came about in that weird period of PC history where IBM had been dethroned, but nobody had taken charge. PC companies were manufacturing "clones" of increasingly outdated systems, and the pain-points were numerous and obvious. It really was a "unique branding opportunity" for someone to step-up and define the post-IBM PC market. Which Intel did. They were largely the one who turned primitive PC ATs + 57 different hacks into the modern PC platform. APIC PCI USB etc. (AMD gets credit for 64-bit largely because Intel refused to do so.) "Intel Inside" wasn't just marketing kickbacks, it was a badly-needed standardization program.
- nolok 9y ago> AMD gets credit for 64-bit largely because Intel refused to do so Yeah, no. Amd64 was made at a time where AMD was on top of its game, they released to the general public first while intel64 still wasn't ready, and microsoft annonced both that 1. windows was going to support amd64, and 2. windows was not going to support two different instruction sets for x86_64, effectively forcing Intel to implement the amd set which they still need to licence to this day. Calling it "Intel let AMD get the credit because they couldn't be bothered" is either a lack of information over what happened or a nice rewrite of history, back then Intel was already feeling the effect of monopoly without competition which made them late on everything and pushing their pentium4 against the upcoming athlon 64 monster.
- detaro 9y agoI think there is a reasonable argument that Intel "refused" to create a cheap 64bit competitor to IA-64, which they tried to push "serious" users (server business) to. When the shoe dropped that only pushing Itanium wasn't going to work, AMD already was ahead on the 64bit extension to x86.
- nolok 9y agoNo there isn't and this is history rewriting, even if you genuinely believe this could be this is not what happened at all. First it's pretty clear, seeing how Intel played their game with the x86 licence, they would never have voluntarily made themselves depend on AMD licensing them x86_64 for the next decades like they are now. Second, back then Intel was very seriously asking / pressuring microsoft into not supporting amd64 extension and wait for intel64 to be released instead. But intel64 was late and delayed, pentium 4 kept hitting brick walls while Athlon started reigning supreme, opteron was starting to be noticed on the server side, and IA-64 was not getting outside of niche territory. Meanwhile linux started making some real pressure on the server andbusiness demands meant microsoft needed to show a windows that supported 64 bits on commodity hardware, asap. Amd64 was ready and the chip using it were cheap and powerfull, so microsoft made their choice.