Intel takes £31 bn in monopoly profits since 1996

Written by Tim Smalley

August 4, 2007 | 10:21

Tags: #anti-competitive #antitrust #anti-trust #competitive #cpu #market #monopoly #profits #study

Companies: #amd #intel

Between the years 1996 and 2006, Intel has extracted more then £31 billion in monopoly profits from the sales of its microprocessor. At least that is what an outside consulting firm, which has been retained by AMD's outside counsel, has said in an economic study that was released on August 2nd.

Dr. Michael A. Williams, Director of ERS Group, has said, “Intel has extracted $60 billion in monopoly profits over the past decade; over the next decade consumers and computer manufacturers would save over $80 billion from a fully competitive market.

A monopoly profit is when a company can set its price at a level above the fair market price for a good or service and still not lose profits to competitors. This profit is generally a lot more then what a company could make given a fair competitive marketplace.

Should the microprocessor market be a fairly competitive market, the study has stated that consumers would save at least £32 billion while computer manufacturers would save £10 billion over the next decade. The savings to manufacturers would be passed on to R&D while improving products and creating a larger variety in products available.

The monopoly profits in question are said to have come from Intel coercing computer manufacturers and retailers alike to either stock just Intel based products or to to stock such a high number of Intel based products that it artificially affects a customer's decision on which product they would buy.

AMD and Intel have been known to row before with Intel suing AMD over AMD allegedly copying Intel's microcode back in the early nineties and then AMD suing Intel for using anticompetitive practices in the US just two years ago. The latter case is still pending a trial case set for April 2009.

Intel also faces antitrust charges from the European Union but full details are currently unavailable.

With Intel making a better product for the larger portion of the past decade, coercion attempts seem probable but also possibly unlikely since AMD didn't really garner the mass support of enthusiasts and regular consumers alike until the launch of its A64 line back in September 2003. Perhaps a price drop on AMD's processor line could have driven more sales due to the fact that price is a major factor in purchasing decisions by consumers.

Do you think that Intel really is the big, bad bully that AMD is portraying it to be or does AMD just have its panties in a bunch over not being able to gain the largest portion of the market share pie? Discuss it with us over in the forums or down below in the comments section.
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