Competition: The Soul of Innovation
Competition is the critical driver of performance and innovation. It benefits everyone by enabling us to choose from an array of excellent products at affordable prices. Competition encourages the adoption of innovation as companies evolve and offer new ideas in order to flourish in the marketplace.

Products should compete on their own merits, and consumers everywhere should have the ability to easily choose the best products available for purchase. Fair and open competition dictates that the best product wins, and market forces prevail.

Innovation fuels economic growth in the global economy. It creates an evergreen environment of new markets - allowing us to reach new customers with existing products – and to serve today’s customers with new products and services.

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IT Competition Benefits…

• The Economy
  Regional and global economies will benefit from a true environment of fair and open competition in the important technology sector. The information technology sector, led by the semiconductor industry, is the leading source of economic growth in the world economy. Competition and innovation in the microprocessor industry fuels growth in other industries and encourages economic development worldwide.
  
  According to the White House Council of Economic Advisers’ 2005 Economic Report to the President, real gross domestic product in the U.S. grew 2.9 percent in 2003, over a quarter of which was attributable to IT.
  
  The same is true in economies around the world. A 2004 study of the EU Commission indicated that every Euro invested in information technology (referred to as information and communication technologies in Europe) resulted in 50-Euro added value. The majority of productivity gains of the developed economies in the last twenty years are connected directly to innovation in IT.
  


• Consumers
  Consumers stand the most to gain from greater competition in the IT market. Fair and open competition means lower prices and greater choice.
  
  Limiting customers’ freedom of choice is harm to innovation. Harm to innovation is a setback for anyone who wants tomorrow’s computers – or any technology – to be better than they are today. Market conditions that permit a single company to become the sole judge of price and quality set a dangerous precedent.
  


• The Government
  Fair and open competition in government procurement contracts would save governments worldwide billions of dollars each year on IT products.
  
  The U.S. government spent approximately $17.5 billion on computer systems in FY2004, and spending is expected to reach $24 billion by 2009.^[1] Competitive pricing, product innovation and performance improvements result from competitive procurement practices. Open procurement ensures that public authorities get the best value and save taxpayers money.
  


• Businesses
  Fair and open competition in the market enables vendors and manufacturers to deliver a greater variety of competitive products to their customers around the world – and often results in lower prices and higher performance.
  
  When competition allows market forces to prevail, leading technology companies can offer the best products to the widest audiences.
  
  The IT industry is now the primary driver of modern economic growth and the catalyst for that growth is the power of the microprocessor.

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Microprocessors: A Driving Force in Technology
Microprocessors drive today’s technological innovation stream. The pace of performance improvement in microprocessors fuels innovation in other areas by lowering costs and creating new products and service opportunities. Only in a truly competitive market can this pace of innovation continue.

The rate of technological progress in the semiconductor industry likely will be a key driver of productivity growth going forward. Future increases in labor productivity are thought to be significantly dependent on the pace of output in the semiconductor industry and the extent to which products embodying these advances diffuse through the economy^[2].

The pace of innovation in microprocessors has never been more aggressive than in recent years, but this has not always been the case – and it may not last very far into the future if anticompetitive practices threaten to stifle innovation. The increased rate of innovation in the microprocessor sector can be traced to 1991, when U.S. courts gave AMD the legal rights to produce and sell the Am386 and truly compete with Intel. Until that time, competition had been restricted by Intel’s lock on the x86 (Windows-compatible) processor architecture. Opening the microprocessor industry to competition triggered an extraordinary acceleration of innovation.

When Intel came under competitive pressure from AMD, the result was an accelerated decline in the price of microprocessors that translated into productivity acceleration^[3]. There was a shift in the product cycle from three years to two years, a consequence of intensifying competition in the semiconductor market^[4].

For nearly a decade, AMD has been a driving force behind innovation and advancement in the semiconductor industry, turning technology into concrete benefits for our customers and their end-users.

Market data shows that competition in the microprocessor market, while currently limited, has nonetheless led to significantly lower prices for consumers. Continued fair and open competition is essential for AMD to continue to develop top-notch products for consumers.

Competition breeds innovation. And this industry is incredibly powerful. Technology can provide opportunities and access to information that can save a life, educate a child or prepare a parent so that he or she can put food on the table.

It is beyond imaginable what technological wonder the future might hold if AMD and others are allowed to compete on a level playing field where everyone plays by the same set of rules.

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[1] INPUT Federal IT Market Forecast FY2004-FY2009

[2] Source: Journal of Policy Modeling: “Information Technology and Productivity: Where are we now and where are we going,” by Stephen D. Oliner and Daniel E. Sichel. 2003.

[3] Source: Journal of Economic Perspectives: “The New Economy: Post Mortem or Second Wind,” by Martin Neil Baily. Spring 2002.

[4] Source: “Projecting Productivity Growth: Lessons from the U.S. Growth Resurgence,” by Dale W. Jorgenson, Harvard University, Mun S. Ho, Resources for the Future, and Kevin J. Stiroh, Federal Reserve Bank of New York. December 31, 2001.