Thursday, June 15, 2006

Intel choked distributors to death

Intel stuffed the channel to make its 1Q06 revenue numbers. It turned out that in that stuffing-da-channel process, some resellers were choked to death and BKed. According to this interesting report:

Hamid Kutty Shajahan, owner of the debt-ridden Micron Computers, has come out strongly against the "Intel distributor cartel" for what he has termed as an attempt to monopolise the market. He alleged that Intel officials used to pressurise resellers to take stock of slow-moving products along with fast moving ones.

"If we refuse, the Intel official would warn us that it could affect our IPP (Intel premium provider) status and our pending rebate payments," he pointed out.

... "Intel team comes to our office and persuades us to take delivery of huge stocks beyond our capacity. If we tell them we don't have enough credit, they talk to distributors to come up with some extra credit lines and dump the stock on us. We have been trapped like this," Shajahan said.
....

Another leading local computer dealer said an Intel field officer had persuaded him to take the Intel Celeron CPU without informing him that a price drop was due after a week. "By force they dumped the stock on our head which we have to sell 30 per cent below the cost price."


Read more at the source.

24 Comments:

Blogger netrama said...

I think I mentioned this before ..that Team Intel just lacks some automatic weapons ,to carry out their daily business !!

6:58 PM, June 15, 2006  
Anonymous Anonymous said...

Very sad indeed.

The US courts need to see the global picture. Especially when both companies AMD and Intel are American by birth, have fabs worldwide, and affect distributors and consumers worldwide. I hope they rule in AMD's favor when it comes to the jurisdiction issue.

What is happening in that country sounds like a shotgun to the head give me the money our else rip-off.

7:02 PM, June 15, 2006  
Anonymous Anonymous said...

If Linux were a viable end-user OS, you would see many antitrust suits against Microsoft for tactics far worse than Intel's.

7:17 PM, June 15, 2006  
Anonymous Anonymous said...

Indeed. Intel's actions pale in contrast to the big MS. But from this site, you'd think Intel was Satan himself.

- Anonymous, GED

7:30 PM, June 15, 2006  
Anonymous Anonymous said...

This doesn't sound illegal... maybe aggressive selling tactics but not illegal. It is common for vendors to offer discounts on products for volume purchases. It is common at the wholesale and retail level. A very common practice. I don't think any of the distis were complaining when they gained IPP status. Being IPP has certain obligations on the part of the disti. THey have just gotten used to not being called on those obligations for so long they forgot about them. It is sort of like the reservist who is called up for battle thinking he might have a cushy job in the reserves, collect an extra paycheck, get college paid for and never have to go into battle. It is always a shock when the other terms of the agreement come into question. Would the distis preferred to never have gotten IPP status in the first place? I especially like this comment: "By force they dumped the stock on our head which we have to sell 30 per cent below the cost price." By force? YOu mean Intel physically forced this guy to buy the Celeron parts. That WOULD be illegal, but I think he is engaging in hyperbole here. Perhaps he should sue Intel if he believes he can show harm.

8:33 PM, June 15, 2006  
Anonymous Anonymous said...

A little of topic, but if Intel had infact harmed and limited competition in the microprocessor industry, while AMD had chip shortages anyways, what kind of price do you think you would be paying for there processors?

There chips are expensive anyways (I know K8 is better than Netburst), but the prices would be ridiculous(sp?).

8:37 PM, June 15, 2006  
Blogger Ajay S. said...

Intel seems to only care about next three quaters,

Seeing the huge Intel India center, you would expect them to be pushing the limits of processor design for their next gen chips, but they are in news here are for all the wrong reasons.

Employees of smaller companies like Texas Instruments, are always more exicted about what they are working on and display ownership on their projects and company.

By contrast, Intel guys seem more like zombies who are there for the good pay. Somehow, Intel's internal culture fails give them a sense of purpose.

8:56 PM, June 15, 2006  
Anonymous Anonymous said...

With this kind of stuff going on with Intel, it's a wonder why more white box manufacturers don't go AMD. I just don't get it. Is there any company that sells exclusively AMD boxes. That would seem the best way to get out of Intel's strangelhold. What's up with that?

Ed

10:00 PM, June 15, 2006  
Anonymous Anonymous said...

"Intel India center" is definitely a big joke...let gets serious. Where do you find experienced (5-20Yr) Microprocessor designers in India?? Hi hi.. Forget microprocessor design, those college kids hired by the software companies barely even make it ..
The last I heard was Intel’s HR folks in India calling up MS Students in the US and literally begging them to go back!!
Now you don’t expect a “next gen chips” do you ? Perhaps some silly backend testing sounds more reasonable..!!

10:21 PM, June 15, 2006  
Anonymous Jeach! said...

There are now many articles out there about the ill-efects of Intel's channel stuffing... and probably more to come.

Some of these distributors will file for chapter 11, restructure and then under a new company choose not to deal with Intel anymore.

What goes around comes around!

10:24 PM, June 15, 2006  
Anonymous Edward said...

"I don't think any of the distis were complaining when they gained IPP status. Being IPP has certain obligations on the part of the disti."

This is BS. The only reason that Intel's IPP is attractive is because Intel is semi-monopoly.

Had Intel had only 2/3 or less market share, such "aggressive but legal" practice will quickly drive its sales to less than 50% (because nobody wants Intel's dumping).

There's no excuse for bad monopoly behaviors.

1:23 AM, June 16, 2006  
Anonymous Anonymous said...

Check out Conroe's instruction efficiency versus FX62 at
http://www.digit-life.com/articles2/cpu/intel-conroe-2-13-ghz.html

4:37 AM, June 16, 2006  
Anonymous Anonymous said...

The internal culture within Intel is cut-throat... the engineers are beat to the ground, and even their employee rating system seems to derail morale within groups/depts.

Intel, like Microsoft, has gotten cocky, monopolized the global market, and it takes companies like Google/AMD to push "new" technologies and change the Tech Industry landscape.

Choking the distributors is going to bite them big time down the road, all for the sake of making their numbers, and so the Intel execs keep getting their million dollar bonuses.

I'm really glad AMD is pushing Intel to come out with new products, since this in turn helps us consumer build faster, better, and CHEAPER computers!! :)

8:03 AM, June 16, 2006  
Anonymous Anonymous said...

This bodes some VERY serious implications and could provide some serious evidence in the AMD vs. Intel anti-trust suit if evidence from outside of U.S. jurisdiction is admissiable in court.(hell I would think evidence from the recent Intel raids by the Japanese government in their own anti-trust case would be enough!)

Keep on shooting those feet Intel, you might just blow both of them off finally!

8:54 AM, June 16, 2006  
Anonymous Devdas said...

Where do you find experienced (5-20Yr) Microprocessor designers in India??

Indians working for Intel or AMD or IBM in the US, or TI (which has been in Bangalore since the early 80s).

10:21 AM, June 16, 2006  
Anonymous Anonymous said...

"Intel seems to only care about next three quaters"

More oversimplification from the peanut gallery here. Intel definitely has an eye on things beyond 3-quarters. See tri-gate transistors. See 45nm, 32nm transition plans. Who moved to 300mm wafers first? Intel. Who transitioned to 65nm first? Intel. This is why AMD is always a loser. Always complaining about how tough Intel is and whining when they get their ass handed to them on a platter quarter after quarter. WHen things get tough AMD has to hide behind the skirt of the courts.

10:34 AM, June 16, 2006  
Anonymous Anonymous said...

"This is why AMD is always a loser. Always complaining about how tough Intel is and whining when they get their ass handed to them on a platter quarter after quarter. WHen things get tough AMD has to hide behind the skirt of the courts. "

What kind of F*^%ING naive commment is that??

Fanboism gets you nowhere, and you obviously have no education in the global economic impact and how monopolies hurt ALL of us.

Ever wonder why the US, EU, JFTC or any Trade Commissions for that matter hammer down on anti-trust/monopolistic abuse?? (History: Railroads... read about it)

Cause it hurts guys like us, the CONSUMER!!

Say AMD goes away... look for $3000 CPU's since Intel can charge whatever they want, and there's nothing you can do about it.

OEM's, Distributors, Resellers, etc all fall victim of the monopoly that has plagued the Tech Industry.

Let's hear you "jump for joy" when you've gotten your wish for the great Intel and have to take out a 2nd mortgage just to buy a PC...

WHY? Because without competition, we're all relegated to what they throw at us, and pay whatever price THEY choose. (Once again, nothing you or anyone can do about it).

Tomorrow, when you wake up, read a book, educate yourself, and think about idiotec comments like that before you respond.

Fanboism only gets you so far in life...

12:23 PM, June 16, 2006  
Blogger netrama said...

"Indians working for Intel or AMD or IBM in the US, or TI (which has been in Bangalore since the early 80s)."

Dude ..are you out of your mind ..
Why would a company from the US go to India and setup shop there ..only to hire engineers from the US.
It is no secret that any Indian engineer with half a brain want to come to the US and research and work here.

This kind of big expectations from India is backfiring

Example - Mass Layoffs of Intel's whitefield Team in Bangalore citing "lack of experinces"

Apple Closing shop with in a couple of months and running as fast as they can from Bangalore

A good US engineer is like a 20 People Team in India ..You go figure out now !!

But what ..the media hype about India does wonders !! I think it is time for the media to get real and stop trying to fool US Companies !!

12:52 PM, June 16, 2006  
Blogger Entrophos said...

More oversimplification from the peanut gallery here. Intel definitely has an eye on things beyond 3-quarters. See tri-gate transistors. See 45nm, 32nm transition plans. Who moved to 300mm wafers first? Intel. Who transitioned to 65nm first? Intel. This is why AMD is always a loser. Always complaining about how tough Intel is and whining when they get their ass handed to them on a platter quarter after quarter. WHen things get tough AMD has to hide behind the skirt of the courts.

This thread is discussing Intel's unethical treatment of its distributors and the effects of this kind of dumping on the market.

As an FYI, tri-gate transitors, 45nm processes, or whatever other innovations Intel might be working on have nothing to do with this discussion and doesn't excuse these terrible business practics.

P.S. for the blatantly stupid fanboy - AMD is taking Intel to court because Intel violated the law, and AMD is seeking to make them stop doing so. Do you know what a law is?

1:03 PM, June 16, 2006  
Blogger netrama said...

"Indians working for Intel or AMD or IBM in the US, or TI (which has been in Bangalore since the early 80s)."

Dude ..are you out of your mind ..
Why would a company from the US go to India and setup shop there ..only to hire engineers from the US.
It is no secret that any Indian engineer with half a brain want to come to the US and research and work here.

This kind of big expectations from India is backfiring

Example - Mass Layoffs of Intel's whitefield Team in Bangalore citing "lack of experinces"

Apple Closing shop with in a couple of months and running as fast as they can from Bangalore

A good US engineer is like a 20 People Team in India ..You go figure out now !!

But what ..the media hype about India does wonders !! I think it is time for the media to get real and stop trying to fool US Companies !!

1:09 PM, June 16, 2006  
Anonymous Anonymous said...

These resellers are just pawns.
Intel would tell the distributors/stuffers to empty out all the excess inventories no matter what. The stuffers, in turn, would tell these pawns to take more than they can sell and Intel is keeping scores. The pawns really have no choices because Intel can
put these non-compliant
pawns in a real disadvantage in the future.
The stuffers face the same situation: play Intel's game or be damned.

1:47 PM, June 16, 2006  
Anonymous Deepak said...

Well, continuing on that debate about one us engineer being equivalent to 20 indian engineers...

I guess I have a right to comment, since I've worked in the US and have spent time with my old iit classmates who now work in b'lore.

There are pros and cons for doing design work in india:

Pros:
1) The cost of an indian worker =20% the cost of an american one
2) An indian guy works 7 days a week, but a person in the us works 5 days a week
3) Although most of the guys are inexperienced, once they learn their stuff, they do good work. TI, which has spent 20 years in india now, designs a lot of their latest cellphones from india...

Cons:
1) Very few good people exist with a graduate degree, unlike in the US
2) Experienced people are hard to come by... intel now runs a return-to-india program, whereby their new hires in the US sign an agreement to go back to india after getting trained in the us for a year. Their Circuits Research Lab in india does the same type of work as the corresponding one in the US!
3) People in india change jobs fast. All the major design companies, like intel, amd, sandisk, nvidia, rambus, ti, synopsys, lsi logic, etc have just set up shop in b'lore and are hiring in droves. With so many good jobs around, people just change jobs every 6 months and get a 50% higher salary everytime!!

Regarding whitefield, it was stupid of intel to assign an inexperienced indian team to work on a new processor. Imagine putting a group of people who've never built a processor before into the deep end!!

In fact, last year, LSI logic was doing cost cutting; they just laid off 50 people in the us and hired 50 people in india.

The people I know in the VLSI area, which includes top executives from ibm, feel that manufacturing has already moved to taiwan and now design is slowly moving to india... Once the guys in india get more experienced, circuit and CAD designers in the us had better watch out!

2:49 PM, June 16, 2006  
Blogger Sharikou, Ph. D said...

Indian engineering

http://www.sysprog.net/images/donkey.jpg

5:04 PM, June 16, 2006  
Anonymous Anonymous said...

Regarding Indian "design" and Indian "engineering"... having worked in software for 20 years, I have yet to see any good software emerge from India.

Most of it is poorly thought out, full of bugs, and difficult to use.

Maybe there is a some quality Indian J2EE droneware that I am not aware of, but somehow I doubt it.

From my experience Indian culture, as applied to software development, is highly anti-quality. Everything about "doing things right" in India was learned from the Brits and now that the Brits are gone, the Indians are floundering.

Even if it does happen, it will be another 20-30 years before quality software emerges from India.

And by that time, there will be much better stuff from Asia, leaving India as the low cost provider, not the quality provider.

Meanwhile the Indians are busy buying turbo-pumps and drilling wells so they can completely decimate their water tables. And that is just scratching the surface of the profound problems in India.

6:52 PM, June 18, 2006  

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