Intel's Maloney: Our business is do or die

SAN FRANCISCO--Sean Maloney has some issues with the European Commission's antitrust case against his company, Intel, which he says must either "thrive or...die."

Last week, Maloney was promoted, along with David "Dadi" Perlmutter, to co-manage the reorganized--and massive--Intel Architecture Group. Maloney, an executive vice president, had been Intel's sales chief, and many observers see him as the odds-on favorite to be Intel's next chief executive. (Current CEO Paul Otellini, though, is likely to be in his post for some time to come.)

On Monday, the European Commission published a "nonconfidential version" of its May 13 decision against Intel, which imposed a fine of $1.45 billion against the chip giant. That decision found that Intel broke EC Treaty antitrust rules (Article 82) by engaging in illegal practices to exclude competitors from the market for x86 processors, which are the basis for a vast swath of consumer and business computers.

The EC action was based on complaints from Intel's chief rival, Advanced Micro Devices. Intel appealed the decision in July to a European court, saying that "evidence was ignored or misinterpreted."

In an interview this week at the Intel Developer Forum, Maloney explained how Intel's business model, forged after a near failure of the company in early 1980s, requires it to be aggressive.

"I joined the company in 1982. We were getting our butt kicked by Asian competitors," Maloney said. "A few years after I joined, [then president] Andy Grove made the decision, let's focus on microprocessors. We exited all the other businesses, we laid off a third our staff. The company was hemorrhaging money," he said.

In 1983, Intel abruptly exited the memory chip business after Japanese manufacturers drove down prices and made that business unprofitable.

"So we picked one thing to do well, and we put everything behind that," Maloney said. "We're not like a Samsung that has 50 different businesses, or a Sony with 20 different businesses, or an Apple with a bunch of different businesses. We were a company that specialized. If you're a company that specializes, you either thrive or you die. You don't have eggs in other baskets."

As a specialist in PC processors, Intel achieved tremendous success. "As a consequence," Maloney said, "the scrutiny has come along with it. Some of the scrutiny is fair. Some of it we're strongly pushing back on."

He continued: "We can show how the consumer has benefited from the microprocessor in terms of constant, constant price reductions. It's pretty unmatched in every other industry. The industry has a long history of cutting prices. And I don't know a single day in the last decade when you couldn't walk into a shop a buy competitor's product. We believe it's an open market."