The two-horse race between Intel and Advanced Micro Devices is one of the computer industry’s more interesting spectator sports. First one pulls ahead with a new design twist, then the other. One scores a deal with a major PC maker, then the other. One has a better quarter, then the other.
AMD finally got Dell to use its chips last year. But its first Barcelona chips weren’t as fast as previously expected, and it continues losing money. Intel meanwhile fired back with new chips this fall.
Wireless and graphics capabilities are important areas where the chipmakers can differentiate themselves, notes Michelle Warren, industry analyst at Info-Tech Research in London, Ont. AMD gained ground on the graphics front by buying one of the Canadian tech industry’s crown jewels, graphics chip maker ATI Technologies, late last year. But Intel has invested heavily in Wi-Fi and WiMAX and has the advantage on the wireless front.
In reality, it’s only a two-horse race when it comes to technology. There the companies are pretty evenly matched – but Intel is much bigger than AMD and dominates the market. That isn’t likely to change.
No matter how many times AMD tweaks Intel’s nose in the technology sweepstakes, the market leader has solid relationships with major PC vendors that make dislodging it pretty much impossible.
To see just how strong Intel’s position is – and how frustrating that is for AMD – look at the European Union’s anti-trust investigation of Intel. Prompted by a complaint from AMD, the investigation is looking into concerns that Intel uses discriminatory rebates and discounts to encourage PC makers to stick with its chips.
Whether or not Intel has actually done such things – which is up to the courts to decide – such tactics are easy enough for a company in its dominant position to employ, and that’s why we have anti-trust laws.
Warren says Intel’s key advantage is its partnerships with system builders and resellers. Intel is a lot like Microsoft that way. Microsoft’s success owes a lot to its relationships with PC manufacturers and with independent software vendors whose products run on Windows and in some cases work with other Microsoft software.
Microsoft understands that stuff very well, and so does Intel. While you won’t succeed if your technology is dramatically worse than the competition’s, it doesn’t have to be perfect or even the best around, as long as it’s not bad and you get those relationships right.
At least AMD’s ability to give Intel a run for its money in technology terms leads to better products. Without AMD, chips wouldn’t have progressed as fast as they have. The smaller rival with technology smarts has forced Intel to improve its game.
In that respect, AMD is to Intel as Apple is to Microsoft. It will never dislodge its bigger competitor from the dominant position, but its impact on the market is greater than its size would suggest.
For AMD, winning just means surviving. Ironically, Intel also wins if AMD survives, because without AMD, Intel would be in a clear monopoly position and the regulators would be all over it. But nobody wins bigger from AMD’s continued survival than computer users because the continued chip race means better PCs at lower prices. And besides, it’s fun to watch.
