October 05, 2006

In Search of Another Monopoly: Intel and the EC

It has been reported that the European Commission review panel has weighed evidence bought against Intel in order to this week to choose whether or not to file formal antitrust charges related to alleged unfair competition against AMD. The Commission has been investigating Intel for several months regarding its rebate schemes to determine if these schemes violate regulatory conditions. If the decision is made to approve the case team assertion that Intel’s schemes are illegal, it would advance the Commission’s decision to make a formal Statement of Objections against the company. At this point, Intel would have the opportunity to respond to the charges. There was no deadline stated for the Commission to decide whether to take the case further.

Given the EC’s proclivity to investigate monopolistic practices ad nauseum, it is amazing that Intel has largely escaped unscathed so far. There are few IT targets as large or larger than Microsoft, a perennial target of EC investigators, and Intel with its commanding position in the microprocessor marketplace is a logical candidate. AMD is the main player in this, as it is the one with so much to gain. Although Intel and AMD have had legal skirmishes in the past, Intel has generally be able to outflank the arguments of its smaller contender, and until a couple years back, had been rather successful in keeping AMD marginalized, or viewed as the low cost, or “other” provider of x86 technology. With Opteron, AMD became a much more visible thorn in Intel’s side and despite slow adoption of its compatible 64 bit computing by a certain large ISV in the Northwest of the US, has been voraciously eating away at Intel’s market share. As this has unfolded, Intel has done its best to keep its customers in line, whether it be through attempts to staunch the 64-bit dilemma by releasing EMT-64, or through various less public means, including the ways in which it prices chips for it various large volume customers and provides co-marketing dollars. It is these types of actions that AMD contends are unfair/illegal.

While we have no insider knowledge of any of these actions, we are observers of the industry nevertheless. When Opteron was launched it was very interesting to see how traditionally strong Intel partners reacted. IBM, for example, embraced Opteron early on, but did an interesting dance and branding two step as it pigeon holed the Opteron as a HPC only solution, and branded its servers outside of the xSeries, the official home of Intel compatible architectures. Microsoft made announcements that it would support Opteron, but then didn’t release Windows Server code until April 2005, many, a moon after Opteron’s general availability. Similarly, HP announced Opteron servers, only after Intel announced EMT-64. Ironically, it was Sun Microsystems, the traditionally SPARC only shop that took the greatest interest in Opteron and was quick to promote all the glory of the platform.

So where does this leave us? By 2006, the market has warmed considerably to Opteron, and even Big Blue straightened out its thinking re: Opteron. Has Intel engaged in anti competitive practices? We are sure the EC will tell us their view, but from the viewpoint of market watcher, it would take a credulous observer to not wonder why the big players acted the way they did back in 2003 and 2004. For an agency that is besides itself with reaction to Microsoft Vista, some of apparent machinations of Intel would seem hard to dismiss without a very close look.

October 01, 2006

Silicon Valley Gets Wired

Silicon Valley is set to become a free wi-fi hot spot.  The open network Silicon Valley Metro Connect will offer universal broadband wireless Internet access to all Silicon Valley users covering 42 municipalities and nearly 1,500 square miles. Beyond providing wireless access to the general public, the network will also be capable of supporting a broad range of uses by residential, small business, public sector and commercial users. The Silicon Valley Metro Connect team, including companies such as IBM, Cisco Systems, Azulstar Networks, and SeaKay, is offering a combination of innovative technology capability and public benefit. Silicon Valley Metro Connect will build the network based on the latest Cisco Systems mesh wireless infrastructure technology, with a technology upgrade program to ensure long-term network vitality and scalability. IBM will provide network design and integration services, as well as technology applications for public agencies and local utilities. Azulstar Networks will act as the network operator for service provisioning of the 802.11b/g base wireless network. SeaKay will work with municipal and public benefit agencies to customize the network to their needs, and will also spearhead outreach and digital inclusion programs to meet the economic development and social benefit objectives of the network. The social benefit objective include providing an alternative communications medium to first responders -- fire, police and emergency medical -- when traditional communications systems may not interoperate, enabling healthcare workers to be able to access information wherever they are, and students can more easily engage in learning beyond the classroom. Silicon Valley Metro Connect is a privately owned and operated network which will be supported by a sponsorship format.  The goal of sponsorship is to ensure a diverse stream of revenues, hopefully so that the network can weather changes in technology and the economic environment over time. The wireless network will offer up to 1Mb data speed for the free foundation service, and comes with built-in protection of user privacy.  It will also include digital divide programs for economically disadvantaged users. For those who wish to upgrade, premium fee-based services such as wireless VOIP and video streaming will be available. Beginning in 2007, the Silicon Valley Wireless Network will leverage the WiMAX IEEE 802.16 wireless standard for the 2-11 Ghz operating bands, to offer greater throughput for mobile and fixed users and higher quality service for video, voice, and data.

Internet access for everyone is all good, but what about security issues?  True, any illusion of privacy on the Internet is a pipe dream, but wi-fi is not only still not as secure as one would hope, but any hacker can just load up their van with equipment and drive around the metro area until they find something they can use.  And are there any protections from Big Brother?  It’s not quite clear from the announcement what the “protection of user privacy” really means, but the parameters of that user privacy should be made clear to everyone signing on, every time they sign on.  Still, there is an element of “caveat emptor” for everyone in cyberspace these days, and any person who wishes for true privacy and anonymity should most likely stay off the Internet altogether.

Then there is the issue of the Silicon Valley Wireless Network competing with local businesses.  What would the local internet cafes and wi-fi hot spots have to offer if the population is signing on for free, besides the essential coffee?  Local government competing with local businesses is usually a very bad idea, not least of which is because they are undermining their own tax base.  But perhaps the wi-fi hot spots and internet cafes can offer faster connections, or more security, or support for hardware and software issues, rather like an Everyperson’s IT Support Group.  One thing that is not in any shortage in Silicon Valley is creativity, so we expect the small business owners will be able to adapt and perhaps even thrive, in spite of the new competition.