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Monopoly of Intel Company

Categories: CompanyMonopoly

What is Monopoly

The term monopoly indicates an outright power of a company to produce and offer an item that has no close replacement. In other words, a monopolized market is one in which there is only one seller of a product having no close substitute. The cross flexibility of demand for a monopoly product is either no or negative. To put it simply, a monopolized market is a single– firm industry.

Qualities of Monopoly:

  1. There is just single seller in the market.

    This indicates that the demand curve faced by the monopolist is the downward– sloping need curve for the market

  2. For a company to continue as a monopoly in the long– run, there should be aspects that prevent the entry of other firms.
  3. The item of the monopolist must be extremely differentiated from other items. There must be no close alternatives.

Market structure qualities of Monopoly:

  1. Number and size distribution of sellers
  2. Number and size distribution of buyers
  3. Item differentiation
  4. Conditions of entry
  5. and exit Single seller
  6. Unspecified
  7. No close alternatives

Entry prohibited or hard Causes and type of monopoly

The emergence and survival of a monopoly firm is associated to the factors which prevent the entry of other firms into the industry and eliminate the existing ones.

The primary barriers to entry are:

  1. Legal constraints: Some monopolies are developed by law in the general public interest. Most of the erstwhile monopolies in the general public energy sector of India, e. g., postal, telegraph and telegram services, generation and circulation of electrical energy, Indian Trains, Indian Airlines and State Roadways, etc.

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    , were public monopolies. Entry to these industries was avoided by law. Now most of these industries are being gradually opened to the private sector. Also, the state may create monopolies in the private sector also, through license or patent, provided they show the potential of and opportunity for reducing cost of production to the minimum by enlarging size and investing in technological innovations. Such monopolies are known as franchise monopolies.

  2. Control over key raw materials: Some firms acquire monopoly power because of their traditional control over certain scarce and key raw materials which are essential for the production of certain goods, e. g. , bauxite, graphite, diamond, etc. For instance, Aluminium Company of America had monopolized the aluminium industry before World War – II because it had acquired control over almost all resources of bauxite supply. Such monopolies are often called ‘raw material monopolies’. Such monopolies also emerge because of monopoly over certain specific knowledge of technique of production
  3. Efficiency in production: Efficiency in production, especially under imperfect market conditions, may be the result of long experience, innovative ability, financial strength, availability of market finance at lower cost, low marketing cost, managerial efficiency, etc. Efficiency in production reduces cost of production. As a result, a firm’s gains higher the competitive strength and can eliminate rival firms and gain the status of a monopoly.
  4. Economies of scale: The economies of scale are a primary and technical reason for the emergence and existence of monopolies in an unregulated market. If a firm’s long – run minimum cost of production or its most efficient scale of production almost coincides with the size of the market, then the large – size firm finds it profitable in the long – run to eliminate competition through price cutting in the short – run.

Once its monopoly is established, it becomes almost impossible for the new firms to enter the industry and survive. Such monopolies are known as natural monopolies. A natural may emerge out of technical conditions or efficiency or may be created by law on efficiency grounds.

Measures of Monopoly Power

Like perfect competition, pure private monopolies are rare phenomena. The real business world is, in fact, characterized largely by monopolistic competition and oligopoly. In these kinds of market, firms should hold some monopoly power in the industry which they exercise in determining the price and output.

Some economists have suggested measures of measuring monopoly power of a firm in the kinds of markets in their own ways. These measures do provide an insight in monopoly power and its impact on the market structure. Besides, they also help in appropriate public policy to control and regulate the existing monopolies and to prevent their growth. We discuss here briefly the various measures of monopoly power suggested by the economists:

  1. Number – of – firms criterion: One of the simplest measures of degree of monopoly power of firms is to count the number of firms in an industry. The smaller the number of firms, the greater the degree of monopoly of each firm in the industry, and conversely, the larger the number of firms, the greater the possibility of absence of monopoly power.
  2. Concentration Ratio: The concentration ratio is one of the widely used criteria for measuring monopoly power. It is obtained by calculating the percentage share of a group of large firms in the total output of the industry.
  3. Excess profit criterion: J. S. Bain and, following him, many other economists have used excess profit, i. e. , profit in excess of the opportunity cost, as a measure of monopoly power. If profit rate of a firm continues to remain sufficiently higher than all opportunity costs required to remain in the industry, it implies that neither competition among sellers nor entry of new firms prevents the firm the firm from making pure or monopoly profit. While calculating excess profit, the opportunity cost of the owner’s capital and a margin for the risk must be deducted from the actual profit made by the firm.
  4. Triffin’s cross elasticity criterion: According to Robert Triffin, cross elasticity of demand for the product of a monopoly firm can be used as a measure of its monopoly power. Triffin’s criterion seems to have been derived from the definition of monopoly itself. According to him, cross elasticity is taken as the measure of degree of monopoly. The lower the cross – elasticity of the product of a firm, the greater the degree of its monopoly power, and vica – versa. But, this criterion indicates only the relative power of each firm. It does not provide a single index of monopoly power. Price and output under a pure monopoly Be careful of saying that “monopolies can charge any price they like” – this is wrong.

It is true that a firm with monopoly has price-setting power and will look to earn high levels of profit. However the firm is constrained by the position of its demand curve. Ultimately a monopoly cannot charge a price that the consumers in the market will not bear. A pure monopolist is the sole supplier in an industry and, as a result, the monopolist can take the market demand curve as its own demand curve. A monopolist therefore faces a downward sloping AR curve with a MR curve with twice the gradient of AR. The firm is a price maker and has some power over the setting of price or output.

It cannot, however, charge a price that the consumers in the market will not bear. In this sense, the position and the elasticity of the demand curve acts as a constraint on the pricing behavior of the monopolist. Assuming that the firm aims to maximize profits (where MR=MC) we establish a short run equilibrium as shown in the diagram below. The profit-maximizing output can be sold at price P1 above the average cost AC at output Q1. The firm is making abnormal “monopoly” profits (or economic profits) shown by the yellow shaded area. The area beneath ATC1 shows the total cost of producing output Qm.

Total costs equals average total cost multiplied by the output. A Change In Demand A change in demand will cause a change in price, output and profits. In the example below, there is an increase in the market demand for the monopoly supplier. The demand curve shifts out from AR1 to AR2 causing a parallel outward shift in the monopolist’s marginal revenue curve (MR1 shifts to MR2). We assume that the firm continues to operate with the same cost curves. At the new profit maximizing equilibrium the firm increases production and raises price. Total monopoly profits have increased.

The gain in profits compared to the original price and output is shown by the light blue shaded area. Not all monopolies are guaranteed profits – there can be occasions when the costs of production are greater than the average revenue a monopolist can charge for their products. This might occur for example when there is a sharp fall in market demand (leading to an inward shift in the average revenue curve). In the diagram below notice that ATC lies AR across the entire range of output. The monopolist will still choose an output where MR=MC for this reduces their losses to the minimum amount.

Acts related to Monopoly The MRTP Act, 1969 Post independence, many new and big firms have entered the Indian market. They had little competition and they were trying to monopolize the market. The Government of India understood the intentions of such firms. In order to safeguard the rights of consumers, Government of India passed the MRTP bill. The bill was passed and the Monopolies and Restrictive Trade Practices Act, 1969, came into existence. Through this law, the MRTP commission has the power to stop all businesses that create barrier for the scope of competition in Indian economy.

The MRTP Act, 1969, aims at preventing economic power concentration in order to avoid damage. The act also provides for probation of monopolistic, unfair and restrictive trade practices. The law controls the monopolies and protects consumer interest. The MRTP Act extends to the whole of India except the state of Jammu and Kashmir. This law was enacted: ? ? ? To ensure that the operation of the economic system does not result in the concentration of economic power in hands of few, To provide for the control of monopolies, and To prohibit monopolistic and restrictive trade practices.

Unless the Central Government otherwise directs, this act shall not apply to:

  1. Any undertaking owned or controlled by the Government Company,
  2. Any undertaking owned or controlled by the Government,
  3. Any undertaking owned or controlled by a corporation (not being a company) established by or under any Central, Provincial or State Act,
  4. Any trade union or other association of workmen or employees formed for their own reasonable protection as such workmen or employees,
  5. Any undertaking engaged in an industry, the management of which has been taken over by any person or body of persons under powers by the Central Government,
  6. Any undertaking owned by a co-operative society formed and registered under any Central, Provincial or state Act,
  7. Any financial institution. Competition Act, 2002

Since attaining Independence in 1947, India, for the better part of half a century thereafter, adopted and followed policies comprising what are known as Command-and-Conrol laws, rules, regulations and executive orders. The competition law of India, namely, the Monopolies and Restrictive Trade Practices Act, 1969 (MRTP Act, for brief) was one such.

It was in 1991 that widespread economic reforms were undertaken and consequently the march from Command-and-Control economy to an economy based more on free market principles commenced its stride. As is true of many countries, economic liberalisation has taken root in India and the need for an effective competition regime has also been recognised. In the context of the new economic policy paradigm, India has chosen to enact a new competition law called the Competition Act, 2002. The MRTP Act has metamorphosed into the new law, Competition Act, 2002. The new law is designed to repeal the extant MRTP Act.

As of now, only a few provisions of the new law have been brought into force and the process of constituting the regulatory authority, namely, the Competition Commission of India under the new Act, is on. The remaining provisions of the new law will be brought into force in a phased manner. For the present, the outgoing law, MRTP Act, 1969 and the new law, Competition Act, 2002 are concurrently in force, though as mentioned above, only some provisions of the new law have been brought into force. Competition Law for India was triggered by Articles 38 and 39 of the Constitution of India.

These Articles are a part of the Directive Principles of State Policy. Pegging on the Directive Principles, the first Indian competition law was enacted in 1969 and was christened the Monopolies And Restrictive Trade Practices, 1969 (MRTP Act). Articles 38 and 39 of the Constitution of India mandate, inter alia, that the State shall strive to promote the welfare of the people by securing and protecting as effectively, as it may, a social order in which justice social, economic and political shall inform all the institutions of the national life, and the State shall, in particular, direct its policy towards securing.

  1. That the ownership and control of material resources of the community are so distributed as best to subserve the common good; and
  2. That the operation of the economic system does not result in the concentration of wealth and means of production to the common detriment.

In October 1999, the Government of India appointed a High Level Committee on Competition Policy and Competition Law to advise a modern competition law for the country in line with international developments and to suggest a legislative framework, which may entail a new law or appropriate amendments to the MRTP Act.

The Committee presented its Competition Policy report to the Government in May 2000 [the report will be referred to hereinafter as High Level Committee (2000)]. The draft competition law was drafted and presented to the Government in November 2000. After some refinements, following extensive consultations and discussions with all interested parties, the Parliament passed in December 2002 the new law, namely, the Competition Act, 2002. Intel Corporation Intel Corporation (NASDAQ: INTC; SEHK: 4335; Euronext: INCO) is an American global technology company and the world’s largest semiconductor chip maker, based on revenue.

It is the inventor of the x86 series of microprocessors, the processors found in most personal computers. Intel was founded on July 18, 1968, as Integrated Electronics Corporation (though a common misconception is that “Intel” is from the word intelligence) and is based in Santa Clara, California, USA. Intel also makes motherboard chipsets, network interface controllers and integrated circuits, flash memory, graphic chips, embedded processors and other devices related to communications and computing.

Founded by semiconductor pioneers Robert Noyce and Gordon Moore and widely associated with the executive leadership and vision of Andrew Grove, Intel combines advanced chip design capability with a leading-edge manufacturing capability. Originally known primarily to engineers and technologists, Intel’s “Intel Inside” advertising campaign of the 1990s made it and its Pentium processor household names. Intel was an early developer of SRAM and DRAM memory chips, and this represented the majority of its business until 1981.

While Intel created the first commercial microprocessor chip in 1971, it was not until the success of the personal computer (PC) that this became their primary business. During the1990s, Intel invested heavily in new microprocessor designs fostering the rapid growth of the PC industry. During this period Intel became the dominant supplier of microprocessors for PCs, and was known for aggressive and sometimes controversial tactics in defense of its market position, particularly against AMD, as well as a struggle with Microsoft for control over the direction of the PC industry.

The 2010 rankings of the world’s 100 most powerful brands published by Millward Brown Optimor showed the company’s brand value at number 48. Intel’s market capitalization is $85. 67 billion (May 11, 2009). It publicly trades on NASDAQ with the symbol INTC. A widely held stock, the following indices include Intel shares: Dow Jones Industrial Average, S&P 500, NASDAQ-100, Russell 1000 Index, Russell 1000 Growth Index, SOX (PHLX Semiconductor Sector), and GSTI Software Index.

On July 15, 2008, Intel announced that it had achieved the highest earnings in the history of the company during Q2 2008 Origins and early years Intel headquarters in Santa Clara, CA, USA Intel was founded in 1968 by Gordon E. Moore (of “Moore’s Law” fame, a chemist and physicist) and Robert Noyce (a physicist and co-inventor of the integrated circuit) when they left Fairchild Semiconductor. A number of other Fairchild employees also went on to participate in other Silicon Valley companies. Intel’s third employee was Andy Grove, a chemical engineer, who ran the company through much of the 1980s and the high-growth 1990s.

Grove is now remembered as the company’s key business and strategic leader. By the end of the 1990s, Intel was one of the largest and most successful businesses in the world. Origin of the name At its founding, Gordon Moore and Robert Noyce wanted to name their new company Moore Noyce. The name, however, was a homophone (words that sound similar) for more noise — an ill-suited name for an electronics company, since noise in electronics is usually very undesirable and typically associated with bad interference.

They used the name NM Electronics for almost a year, before deciding to call their company Integrated Electronics or Intel for short. However, Intel was already trademarked by a hotel chain, so they had to first buy the rights for the name. Early history Intel has grown through several distinct phases. At its founding, Intel was distinguished simply by its ability to make semiconductors, and its primary products were static random access memory(SRAM) chips.

Intel’s business grew during the 1970s as it expanded and improved its manufacturing processes and produced a wider range of products, still dominated by various memory devices. While Intel created the first commercially available microprocessor (Intel 4004) in 1971 and one of the first microcomputers in 1972, by the early 1980s its business was dominated by dynamic random access memory chips.

However, increased competition from Japanese semiconductor manufacturers had, by 1983, dramatically reduced the profitability of this market, and the sudden success of the IBM personal computer convinced then-CEO Grove to shift the company’s focus to microprocessors, and to change fundamental aspects of that business model.

By the end of the 1980s this decision had proven successful. Buoyed by its fortuitous position as microprocessor supplier to IBM and its competitors within the rapidly growing personal computer market, Intel embarked on a 10-year period of unprecedented growth as the primary (and most profitable) hardware supplier to the PC industry. By the end of the 1990s, its line of Pentium processors had become a household name. Slowing demand and challenges to dominance After 2000, growth in demand for high-end microprocessors slowed.

Competitors, notably AMD (Intel’s largest competitor in its primary x86 architecture market), garnered significant market share, initially in low-end and mid-range processors but ultimately across the product range, and Intel’s dominant position in its core market was greatly reduced. In the early 2000s then-CEO Craig Barrett attempted to diversify the company’s business beyond semiconductors, but few of these activities were ultimately successful. Intel had also for a number of years been embroiled in litigation.

US law did not initially recognize intellectual property rights related to microprocessor topology (circuit layouts), until the Semiconductor Chip Protection Act of 1984, a law sought by Intel and the Semiconductor Industry Association (SIA). During the late 1980s and 1990s (after this law was passed) Intel also sued companies that tried to develop competitor chips to the 80386 CPU. The lawsuits were noted to significantly burden the competition with legal bills, even if Intel lost the suits.

Antitrust allegations that had been simmering since the early 1990s and already been the cause of one lawsuit against Intel in 1991, broke out again as AMD brought further claims against Intel related to unfair competition in 2004, and again in 2005. In 2005, CEO Paul Otellini reorganized the company to refocus its core processor and chipset business on platforms (enterprise, digital home, digital health, and mobility) which led to the hiring of over 20,000 new employees. In September 2006 due to falling profits, the company announced a restructuring that resulted in layoffs of 10,500 employees or about 10 percent of its workforce by July 2006.

Regaining of momentum

Faced with the need to regain lost marketplace momentum, Intel unveiled its new product development model to regain its prior technological lead. Known as its “tick-tock model”, the program was based upon annual alternation of microarchitecture innovation and process innovation. In 2006, Intel produced P6 and Net Burst products with reduced die size (65 nm). A year later it unveiled its Core microarchitecture to widespread critical acclaim; the product range was perceived as an exceptional leap in processor performance that at a stroke regained much of its leadership of the field.

In 2008, we saw another “tick”, Intel introduced the Penryn micro architecture, undergoing a shrink form 65 nm to 45 nm , and the year after saw the release of its positively reviewed successor processor, Nehalem, followed by another silicon shrink to the 32nm process. Intel was not the first microprocessor corporation to do this. For example, around 1996 graphics chip designers nVidia had addressed its own business and marketplace difficulties by adopting a demanding 6-month internal product cycle whose products repeatedly outperformed market expectation.

Sale of XScale processor business

On June 27, 2006, the sale of Intel’s XScale assets was announced. Intel agreed to sell the XScale processor business to Marvell Technology Group for an estimated $600 million (They bought them for $1. 6billion) in cash and the assumption of unspecified liabilities. The move was intended to permit Intel to focus its resources on its core x86 and server businesses, and the acquisition completed on November 9, 2006. Acquisition of McAfee On 19 August 2010, Intel announced that it planned to purchase McAfee, a manufacturer of computer security technology. The purchase price was $7.

68 billion, and the companies said that if the deal were approved, new products would be released early in 2011. This is the largest acquisition ever in information security industry and largest ever in Intel’s 42-year history. Competition In the 1980s, Intel was among the top ten sellers of semiconductors (10th in 1987) in the world. In 1991, Intel became the biggest chip maker by revenue and has held the position ever since. Other top semiconductor companies include AMD, Samsung, Texas Instruments, Toshiba and STMicroelectronics. Competitors in PC chip sets include AMD, VIA Technologies, SiS, and Nvidia.

Intel’s competitors in networking include Freescale, Infineon, Broadcom, Marvell Technology Group and AMCC, and competitors in flash memory include Spansion, Samsung, Qimonda, Toshiba, STMicroelectronics, and Hynix. The only major competitor in the x86 processor market is Advanced Micro Devices (AMD), with which Intel has had full cross-licensing agreements since 1976: each partner can use the other’s patented technological innovations without charge after a certain time. However, the cross-licensing agreement is canceled in the event of an AMD bankruptcy or takeover.

Some smaller competitors such as VIA and Transmeta produce low-power x86 processors for small factor computers and portable equipment. Why Intel is said to have Monopoly in CPU processor market. Monopoly is a market condition in which there is a single seller of a particular product, i. e. , there are no close substitutes. However, pure monopoly does not exist in today’s market conditions. So, a company can be said to have a monopoly if it dominates a major market share in a particular product. In case of Intel, it has a market dominance of more than 75% in all three of its major products.

The closest rival of Intel is AMD. Below is the table showing respective market shares of both Intel and AMD in different processor segments. Table showing market share of Intel and AMD Processor Market share Desktop PC processor Mobile PC processor PC server/workstation Intel 71. 8% 87. 8% 90. 2% AMD 28. 0% 12. 1% 9. 8% Source: Xbit Laboratories. As shown in the table, Intel captures more than 70% market share in Desktop PC processor and more than 85% market share in Mobile PC processor and PC server/workstation which clearly indicates its monopoly in the processor chip market.

Intel growth

There was a time only a couple of years ago when the much smaller AMD was able to totally dominate its competitor Intel in virtually every benchmark and measure of performance for the dollar. That all changed in July, 2006 when Intel introduced its Core 2 series of processors. To put it into a layman’s perspective, it was as if a new SUV had been introduced that cost $3,000 and ran on solar power. Jaws dropped all over cyberspace. and the popular rush to this new processor series resembled the stampede for tickets to an Abba reunion concert.

To say that AMD was left in the dust would be an understatement. It might be more accurate to compare it to the look on the Coyote’s face when he realizes that he’s flown off the cliff and there is nothing but air between him and the canyon floor. Source: Hal Licino, Hub Pages Source: Passmark Software. Website: http://www. cpubenchmark. net/market_share. html Lawsuits against Intel Intel has often been accused by competitors of using legal claims to thwart competition. Intel claims that it is defending its intellectual property. Intel has been plaintiff and defendant in numerous legal actions.

Anti-competitive allegations by regulatory bodies AMD Vs. Intel

AMD launched the lawsuit against its rival Intel, the world’s leading microprocessor manufacturer. AMD has claimed that Intel engaged in unfair competition by offering rebates to Japanese PC manufacturers who agreed to eliminate or limit purchases of microprocessors made by AMD or a smaller manufacturer, Transmeta. The complaint was filed in the U. S. District Court in Delaware in June 2005. The court date, originally scheduled for April 2009, was pushed back to February 2010.

One delay was due to the Korea Fair Trade Commission issuing Intel a fine of US$25. 4 million. Some of the manufacturers involved in the case were Dell, HP, Gateway, Acer, Fujitsu, Sony, Toshiba, and Hitachi. In February 2009 it was reported that Intel had spent at least US$116 million to date on legal representation on the antitrust suit. This was inferred from a US$50 million lawsuit filed by Intel against one of its insurers; the lawsuit disclosed that Intel had already exhausted US$66 million in coverage from two other insurers while fighting the antitrust lawsuit.

This is not the first time AMD has accused Intel Corp. of abusing their power as the leading manufacturer for X86 processors. In 1991, AMD filed an antitrust lawsuit against Intel claiming that they were trying to secure and maintain a monopoly, and one year later, a court ruled against Intel, awarding AMD US$10 million “plus a royalty-free license to any Intel patents used in AMD’s own 386style processor”.

EU Antitrust case On May 13, 2009, the European Commission (EC) imposed a € 1.06 billion fine on the world’s largest semiconductor company, Intel Corporation (Intel), for violating the antitrust policies of the European Union. This was considered to be the highest fine ever charged in the history of EC.

Intel was accused of engaging in anti-competitive business practices for gaining dominance in the microprocessors market by driving out competitors like Advanced Micro Devices (AMD) from the market. One of the major charges against Intel was that it gave conditional rebates to Original Equipment Manufacturers (OEMs) for committing themselves to buying all the x86 microprocessors from Intel.

It also made payments to Media-Saturn Holding, a German retailer, on the condition that its stores sold only Personal Computers (PCs) with Intel’s microprocessors. Another important charge against Intel was that it allegedly made payments to PC manufacturers to delay or cancel the launch of other PCs equipped with x86 microprocessors manufactured by Intel’s competitors and limiting the distribution channel, thereby controlling the availability of these products in the market. The EC investigations began after AMD lodged a complaint in 2001.

After several years of investigations, EC found Intel guilty and levied a historic fine and gave a ruling that required Intel to stop offering illegal rebates to OEMs and indulging in other anti-competitive business practices intended at driving AMD out of the microprocessors market. Some analysts felt that the EC ruling would enable AMD to gain access to the market largely dominated by Intel. On the other hand, some analysts felt that the ruling would be an impediment to innovations in the industry and would result in affecting the European economy. Source: IBS Centre for Management Research.

Case Code – ECON030 Japan In 2005, the local Fair Trade Commission found that Intel violated the Japanese Antimonopoly Act. The commission ordered Intel to eliminate discounts that had discriminated against AMD. To avoid a trial, Intel agreed to comply with the order. South Korea In September 2007, South Korean regulators accused Intel of breaking antitrust law. The investigation began in February 2006, when officials raided Intel’s South Korean offices. The company risked a penalty of up to 3% of its annual sales, if found guilty. In June 2008, the Fair Trade Commission ordered

Intel to pay a fine of $25. 5 million for taking advantage of its dominant position to offer incentives to major Korean PC manufacturers on the condition of not buying products from AMD. United States New York started an investigation of Intel in January 2008 on whether the company violated antitrust laws in pricing and sales of its microprocessors. In June 2008, the Federal Trade Commission also began an antitrust investigation of the case. In December 2009 the FTC announced it would initiate an administrative proceeding against Intel in September 2010.

In November 2009, following a two year investigation, New York Attorney General Andrew Cuomo sued Intel, accusing them of bribery and coercion, claiming that Intel bribed computer makers to buy more of their chips than those of their rivals, and threatened to withdraw these payments if the computer makers were perceived as working too closely with its competitors. Intel has denied these claims. On July 22, 2010, Dell agreed to a settlement with the U. S. Securities and Exchange Commission (SEC) to pay $100M in penalties resulting from charges that Dell did not accurately disclose accounting information to investors.

In particular, the SEC charged that from 2002 to 2006, Dell had an agreement with Intel to receive rebates in exchange for not using chips manufactured by Advanced Micro Devices. These substantial rebates were not disclosed to investors, but were used to help meet investor expectations regarding the company’s financial performance; the SEC said that in the first quarter of 2007 they amounted to 70% of Dell’s operating income. Dell eventually did adopt AMD as a secondary supplier in 2006, and Intel subsequently stopped their rebates, causing Dell’s financial performance to fall.

Conclusion

As stated above, Intel captures more than 75% of total market share in three leading processors. This is due to Intel’s efficiency in production. This is a result of long experience, its ability to innovate, strong financial strength, managerial efficiency and strong market reputation which reduces its marketing costs. As a result, its cost of production is less and it is able to eliminate its rival firms (AMD) and gain monopoly status. Moreover, it constantly uses its financial power to curb its competitors by providing incentives to dealers.

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Monopoly of Intel Company. (2017, Apr 30). Retrieved from http://studymoose.com/monopoly-of-intel-company-essay

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