A modern day tale of David & Goliath

I grabbed this image from a fantastic European magazine. It got me thinking about the article I wrote for Hexus.net. I received a number of comments after it was posted. Most of the people understood the point of the article yet few didn't quite catch the underlying theme, and I suppose I could have articulated it differently. No matter what my opinion is, there will always be others so I appreciate any comments.

This article isn’t to point out what one company does better than another; it’s just to show you – the reader – our perspective as we try to balance our relationships.

My “job” (I prefer “jobby”) requires that I stay on top of industry trends, keep my company ahead of the curve, and design new and interesting products.

Thankfully we’ve been able to keep innovating new products, and as such they tend to get featured in various publications around the world. All the media attention gives us a voice in the industry, so it’s mutually beneficial for companies like AMD, ATi, Intel, Corsair, Nvidia, Hitachi, and others to work with us on a strategic level. These relationships are important for so many reasons. We need access to their engineering resources when there are problems or suggestions for new products, we need access to higher level technical support, we need to get allocation from sales, as well we need to work with their review teams on getting products for our reviews.

A number of years ago I remember Intel called us and said they wanted to “engage” with us. They wanted to work with us on reviews, sampling, marketing, etc. It was a shock, because up until then Intel never really called on us proactively up until then. They flew people from all over the place to visit with us on more than one occasion. It seemed as if they wanted to elevate themselves as the “Ultimate Gaming CPU”. I’ve never been one to buy into hype, even though we probably could have leveraged the heck out of the relationship. I have always been about doing what’s best for our customers. I prefer offering our customers choices, which means we really shouldn’t lean one way or the other. Sometimes it’s impossible not to lean due to technological advances of one company over another.

At that time, Intel had a pretty good strategy. They were indeed building a great CPU and they had just started to gain ground in gaming. Perhaps it was a coincidence that well over a year into the newly employed strategy, Dell launched their gaming PC and Intel stopped engaging with us. Other than the odd call from our sales rep we aren’t treated at the same level as we were before. One could surmise that Intel strengthened their brand amongst gamers so Dell could take over from there. Perhaps that was the case, or perhaps it was just a matter of course - regardless their performance lead in gaming was short lived as we’ve all witnessed.

AMD has always had this awesome grassroots approach to the industry, and their relationship building is on a completely different planet from Intel’s. AMD has never tried to apply pressure on us to change the “ratio” of AMD/Intel on our systems. AMD has always called on us in good times and in bad, and they’ve always addressed any issues we’ve had within minutes of blurting out an email. It’s not one or two people either; it’s the corporate culture at AMD that is completely different than Intel. I can site many examples, and yet that would be redundant because I’m not alone in this assessment.

In any case, I think it’s something Intel needs to work on, and since they seem to be focusing on their new product roadmap, it’s probably better late than never. Intel needs to focus more resources on building better components, and they need to focus more resources on the channel. I believe that Intel may show a stronger product offering next year, but AMD will likely surprise everyone again.

When you look at the AMD v. Intel litigation, I believe it’s not money motivated. Being a monopoly may be perfectly legal, but AMD believes that a company with the size and market power of Intel should not be able to resort to certain coercive tactics in order to keep or gain market share and stifle competition. They must have seen enough instances of what they believe to be illegal behavior to file the suit – litigation ain’t cheap.

Last week there was an announcement that AMD subpoened a number of Intel customers (many of whom are AMD and Intel customers) in order to begin the discovery process. This doesn’t mean that the companies are being sued, far from it – in fact all they want to do is gather information and solidify some of the answers they’ve been looking for pertaining to this lawsuit.

Do I agree with the lawsuit? It’s hard to say. I am really not sure what a reasonable judgment should be, but I look forward to seeing all the evidence in the light of day. Earlier this year Japan's Fair Trade Commission found Intel contracts that specifically made pricing rebates dependent upon limiting competition to 10% or even excluding competition entirely. That doesn’t seem like volume pricing discounts to me. The EU Commission and Korean FTC are investigating Intel as well. This goes beyond AMD’s case. Watch how this plays out.

If anything, this lawsuit underscores the fact that current AMD processors are superior to Intel’s in pretty much every possible way. AMD’s own confidence in their product is causing manufacturers and OEMs to think twice before they blindly create new platforms. AMD has also caught the attention of major ODMs in Taiwan, many of whom who rarely gave them a second look in the past. In fact, I just had a conversation with a motherboard manufacturer in Taiwan who was planning on designing a specific type of motherboard for us – when I mentioned the AMD Turion they were sold.

People on my side of the industry are actually listening to their customers, and that’s refreshing. Sun is listening, and that’s why they are going to eat away at the server market space. Best Buy is also seeing the light, judging by the fact that they introduced new AMD based SKUs to their line up recently. Even the smaller channel companies are seeing the light and they are making the switch with many of their systems. Companies like VoodooPC are listening too, that’s why we are leaning on ODMs in Taiwan to adopt Turion as fast as possible, because we know that they are the best mobile processor available.

The morale of the story is we need to listen to our customer needs and create products that customers want. We need to hold true to our brand promises, whether it’s delivering ultimate value, ultimate service, or ultimate luxury. Whatever the case may be, customers are no longer interested in lip service. I include my company in this statement too – we need to keep ourselves in check.

UPDATE - check out this piece I wrote after CNET posted their link to this article.