Xref: utzoo comp.arch:19050 sci.econ:2010 Path: utzoo!utgpu!news-server.csri.toronto.edu!cs.utexas.edu!usc!apple!amdcad!mozart.amd.com!cayman!brett From: brett@cayman.amd.com (Brett Stewart) Newsgroups: comp.arch,sci.econ Subject: Re: Intel bugs / bugged by Intel :-( Message-ID: <1990Nov7.184237.22840@mozart.amd.com> Date: 7 Nov 90 18:42:37 GMT References: <35325@cup.portal.com> <1990Oct30.210852.15087@mozart.amd.com> <8527@scolex.sco.COM> Sender: usenet@mozart.amd.com (Usenet News) Organization: Advanced Micro Devices, Inc., Austin, Texas Lines: 60 After listening to the last little bit of this news thread, about the relationship between Intel and AMD, and who did what to whom, and so on, I am prompted to point out a fact. Intel DOES derive monopoly pricing from the 386. They sell it at many many many times the cost to make it. An independent judge says that they contrived to do so in an unscrupulous fashion. And AMD was damaged. However, AMD was damaged by being denied the right to sell competitively a chip it had expected to get under its agreement. If it had got it, as the agreement would have allowed if not thwarted, AMD would NOT have made a *monopoly* profit, it would have made a *normal* profit. AMD's presence in the market would have caused 386 pricing to fall to normal profit levels, not the ridculous levels permitted by Intel's position as a monopoly supplier. Not only was AMD damaged by Intel's thwarting of the agreement, but each and every purchaser of something with a 386 inside was damaged. AMD can be angry, because Intel cheated on a deal. But YOU can be angry, because they did so to exploit YOU. Some commentary here suggests that its authors LIKE being exploited. I dont. And, I own and use PC's. Probably, many of you on the net paid about $800 more for your 386-unix PC than you would have if Intel had honored its deal. Again, these are my own opinions, based on my reading of the judge's entire decision and my education in economics. I am prepared to change them if anyone can demonstrate: 1.) The judge did not find Intel liable for breach of its agreement with AMD (impossible, because he did find them liable) 2.) Someone can argue that 386 pricing is near the level where it would be had not Intel breached, per 1. above. I think this will be tough. The 386 is about 70K square mils. The 29000 is about 175K square mils. Silicon, folks, is silicon, and the 29000 perversely costs a lot less than a 386. The costs to make them go as die size, and that's just how it is. 3.) (A tough one) Someone can argue that they are somehow better off for having hundreds of dollars less than they would have, or if someone can argue that it is better that Intel and AMD between them did not make more 386's at a lower price. Basically, this is what an economist might call 'consumer surplus,' the value everyone gets when prices get pushed down to sustain a 'normal' profit rather than a 'monopoly' profit; it is the very same consumer surplus that gets eliminated by taxation that effectively raises a price to a level above the pure competion point where marginal revenue = marginal cost. Intel caused there to be fewer 386's out there (at a higher and more profitable price) so they eliminated value to consumers both by exploitively high pricing and by denying the market the benefit of greater volume. A monopolist cannot charge any price; eventually some consumers balk. What a monopolist does is pick the price point it wants and then sell what it can at that price. I do not work in the part of AMD that has something to do with iAPX architectures. Best Regards; Brett Stewart Advanced Micro Devices, Inc. 1-512-462-5321 FAX 5900 E. Ben White Blvd MS561 1-512-462-4336 Telephone Austin, Texas 78741 USA brett@cayman.amd.com