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Nome and Paul Van Middlesworth - owners - The Computer Factory
Untitled Document
Has Success Spoiled MicrInDell?
Microsoft, Intel and Dell are each great American success
stories. Men of great vision and energy founded each company. Their companies
advanced technology, changed our lives and created tens of thousands of jobs
that supported American families and produced wealth and comfort for millions.
Even today each of these companies hold an important position in the computer
industry, but things have changed a bit.
Microsoft has become a bureaucratic fossil incapable of creating innovation.
Today it lives by “cash cowing” its decades old dominance in office
suites and PC operating systems. Microsoft is an aging vamp, cadging a free
lunch on her faded beauty.
Dell once built quality PCs and provided excellent customer service. Today
it does neither. Dell closed factories and fired thousands of Americans. It
now sells PCs designed and built by “no name” overseas manufacturers
and serviced by “low bidder” contractors. Dell is little more than
an empty shell and a shill for Asian manufacturers.
Intel still designs and fabricates CPUs, graphics engines
and motherboard chipsets, but in recent years they seem to rely as much on
questionable business practices as technical competence.
Last week (FCC) Fair Trade Commission Chairman Jon Leibowitz
announced the settlement of a suit involving Intel’s “Unfair, anticompetitive
and deceptive conduct.” In September 2009 AMD settled for $1.25 billion from
Intel. In Europe, Intel is contesting another $1.45 billion fine for
anticompetitive practices.
One might be tempted to sympathize with Intel as simply a “deep pockets”
victim of rapacious lawyers and governments but in our opinion, Intel is “reaping
what it sowed.”
Prior to 2000, Intel reigned as the undisputed technology
leader in PC CPUs. Then AMD, a fraction the size of Intel, passed them in CPU
technology. AMD’s Athlon CPUs were cheaper and faster than Intel’s Pentium III
and IV. Intel lost market share and was forced to lower prices. To Intel’s
further chagrin, AMD rattled off a series of industry firsts. The first one GHz
CPU, the first 64-bit CPU and first dual core CPU. When Intel couldn’t match
AMD’s technology it started a campaign of deception and borderline fraud.
Intel spent billions in co-op advertising with PC makers like Dell to hype
the new Pentium IV. The Pentium IV was cheaper to produce but actually slower
than the Pentium III. When the Pentium IV developed heat problems, Intel designed
a secret “slow down circuit” that reduced the clock speed as temperature
of the CPU rose.
In 2001 Intel redesigned the Pentium IV to use “Rambus” RAM instead
of the standard SD-RAM. Intel controlled the source of Rambus RAM and sought
to reap a windfall. When PC makers rebelled against the expensive Rambus, Intel
had to abandon it and redesign their CPUs and motherboards. They lost hundreds
of millions and more market share to AMD.
Next Intel tried to freeze AMD out of the major PC makers by
offering steep discounts to manufacturers who would shun AMD CPUs. To their
credit, most PC makers shunned this offer. Only Dell bought in 100%. As a
result of choosing to use only the slower Intel Pentiums, Dell lost its number
one position in PC sales to HP/Compaq and Intel lost its number one position in
American CPU sales to AMD.
Probably the sleaziest consumer deception of all was the “Vista Capable”
conspiracy involving Dell, Intel and Microsoft.
PC makers continued to sell XP PCs during the period leading up to the long
delayed release of “Vista.” PC buyers needed to be sure that the PCs
they were buying could be upgraded to “Vista” when it became available.
Microsoft authorized a “Vista Ready” label for PCs that met “Vista’s”
requirements. AMD PCs qualified, most Intel PCs did not. Intel’s standard motherboard
chipset (the 915) did not support “Vista’s” new, “Aero” graphics.
Dell and Intel rightly feared that consumers would steer
clear of their “non Vista Ready” Pentiums in favor of the “Vista
Ready” AMD Athlons. The result could be billions in lost revenue and excess
inventories.
Microsoft agreed to create a “Vista Basic” operating
system without the “Aero” graphics and to authorize a “Vista Capable”
label for Intel PCs. Since Intel could fully operate the “castrated”
Vista Basic, “Vista Capable” wouldn’t exactly be a lie. Of course Intel
and Dell hoped that consumers would assume that “Vista Capable” and “Vista
Ready” were the same thing and for the most part they did. It worked for a
while but now a “class action” lawsuit on behalf of swindled consumers
is winding its way through the courts. Here at The Computer Factory we, like everyone else, use Microsoft’s
operating systems. We also enjoy repairing and upgrading hundreds of Dells each
year. When it comes to using Intel CPUs however, we rarely do. AMD CPUs
consistently outperform Intel’s when compared on a dollar for dollar basis.
Intel has managed to muscle its way back on top holding nearly 80% of the “Soccer
Mom” retail market but at The Computer Factory, AMD CPUs rule in 90% of our
new PCs. We, and most of our business
and home users, understand performance and value.
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