Intel's year seems to be going from bad to worse. The Semiconductor Industry Association has forecast that worldwide semiconductor revenues will shrink by 1.8 per cent to about $134.6 billion this year - down from $137.2 billion in 1997. And as the chip market sees a weakening in demand, annual revenues for DRam fell 26.6 per cent to $14.5 billion.
After postponing its Merced chip - much to the annoyance of business partner Hewlett Packard - and axing 10 per cent of its staff, it looks like another hard year for the chip giant.
There is more to come. The Federal Trade Commission (FTC) has stepped into the increasingly litigious US computer industry to examine whether Intel has abused its dominant position.
The main battle cry will be whether the courts can prove that Intel withdrew vital technical information from workstation vendor Intergraph to 'persuade' it to sign over a patent.
As always, litigation begets litigation. This spat may have started with a threat from Intergraph to file lawsuits against other workstation vendors, with one such case pending in Alabama. It appears Intel's plans to produce more highly integrated products, such as complete chipsets that include the same ability as graphics processors, have triggered the anti-competition move. In the chip giant's case, it doesn't look as if jealous rivals have launched the move.
The lawsuit looks like a genuinely worried response to the dominance of one giant and the implications for the industry. But it is strange that the two men who shared a Comdex platform two years ago, Intel CEO Andy Grove and Microsoft CEO Bill Gates, find their respective companies in the dock. Grove may have made way for a new chief executive, but it is reasonable to expect Craig Barrat to come out fighting in the same fashion as his predecessor.
At that Comdex session, I was not alone in being perplexed about the road Grove seemed to be taking Intel down - away from the business model and into the homes of every American via graphics and set-top boxes. The FTC's lawsuit seems fuelled by a determination to stop the Wintel giant from marching into every home and office in the US.
Maybe Intel was more prescient than we gave it credit for - it's possible it realises the jaundiced view corporate America takes of 'versionism' in hardware and software. The paranoia that Intel and Microsoft have displayed about licensing their own technology has put the law into action.
There is little difference between the two giants as far as the reseller is concerned, and both companies are using the same business weapons. Falling prices can only help the reseller, but serious accusations in court may undermine business confidence. It will be interesting to see how Intel's rivals, particularly IBM, react as its strength is sapped by the justice system's attention.
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