Dell, the world's third largest computer maker, was paid about $6 billion between February 2002 and January 2007, according to a lawsuit filed by New York Attorney General Andrew Cuomo.
Over the past few years, Intel has given payments to a many other computer makers such as Hewlett-Packard, IBM etc. Cuomo's suit follows legal action in many other countries like Europe, Japan, and South Korea that also claim that Intel used the payments to gain an advantage over AMD.
Intel had the power of persuasion
Cuomo claims that those payments gave Intel the power to persuade other companies for limiting the use of AMD chips.
Intel refuted the charges by saying that the payments resulted in lower prices for customers.
"We disagree with the New York Attorney General," says Intel spokesman Chuck Mulloy. "Neither consumers who consistently pay lower prices for PCs and computer power and get increased innovation, nor are justices being served by bringing this case at this time. Clearly we will defend ourselves."
Dell and Intel relations
Dell and Intel’s strong relationship can be figured out from the documents of the case which suggest that there was widespread communication among senior level officers in both the firms. Dell was highly dependent on Intel to meet its financial targets.
In July 2002, Michael Dell was informed that Intel was willing to do “whatever it takes” to keep Dell from buying ADM chips. Around that time, payments were set to increase from $70 million to $100 million.
Dell required two increases, in 2004 and in April the same year, and the company asked Intel to boost its payment by $100 million, says the lawsuit.
Dell made a profit of $846 million in third quarter of 2004, out of which it received $304 million from Intel.
Intel paid Dell around $200 million between November 2006 and January 2007, which was about 29 percent of the Dell's net income for that quarter.
A Dell spokesman declined to comment on Dell's part in it, calling it "an Intel matter, not a Dell matter".
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