Intel CEO discusses fine, admits Atom bundling discounts


— 3:59 PM on May 13, 2009

During a conference call today, Intel CEO Paul Otellini and spokesman Chuck Malloy spoke to the press about the European Commission's $1.44 billion fine. Intel reiterated its strong disagreement with the ruling and its plan to appeal the decision. The firm also talked a little bit about the ongoing U.S. antitrust investigation and discount policies.

According to Otellini, Intel only offers volume-based discounts, and the European Commission hasn't found evidence of exclusive deals with customers. The CEO also challenged the Commission's allegations of harm to consumers and competitors. "It's hard to imagine how consumers were harmed in an industry which has lowered cost of computing by a factor of 100 during the term of this case," he remarked, "and at the same time that happened, AMD claims that it's more vibrant than ever."

When asked whether Intel was concerned about similar action from U.S. regulators, Otellini sounded less sure of himself:

Well, there is an investigation . . . at the [U.S. Federal Trade Commission]; there's also one in the United States by the New York Attorney General's office. Intel is fully cooperating with both of those . . . we're producing evidence, we produce testimonies, depositions, and so forth. The FTC has had a position on anti-trust which is very much comparable, I think, to the EU's, so we're actually being looked at under the same lens today by both parties.

Would the European Commission's decision make similar action in the U.S. more likely? "I think you need to ask the FTC that, but . . .the FTC will look at, I hope, the preponderance of the evidence, and perhaps draw a different conclusion," he responded.

Otellini went on to note that the U.S. investigation is still only an investigation and that Intel has been investigated before with no ill effects. As for rulings in the EU and Korea (which fined the chipmaker around $25 million last June), Intel is confident that it will be cleared by the appeal process.

Finally, still on the topic of discounts and rebates, Otellini made an interesting comment when asked about Atom bundling in relation to Nvidia's Ion chipset:

On occasion, we'll sell a combination of microprocessor and chipset and other chips at a price which is more favorable than if people bought the products independently. They have a right to buy the products independently, they have every right to mix and match products, but we believe that, relative to our CPU-chipset pricing, that there's no harm nor foul there.

When asked to clarify, he said, "We have historically offered better pricing to people that buy more products. Nothing new there." So, essentially, Intel is making Nvidia's job more difficult by offering discounts when customers buy Atom processors together with Intel chipsets. On the other side of the coin, Nvidia has told us that Ion-based systems should only be marginally more expensive than their Intel-only counterparts. Nvidia expects more than 40 Ion-based systems to be released by the end of next quarter.

 
   
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