1. AMD makes a superior CPU to Intel. This is indisputable.
2. Intel is deliberately engaging in actions which are keeping AMD’s superior CPU from being used in systems produced by manufacturers who also utilize Intel by withholding millions of dollars of cash “rebate” money based on bogus quotas custom-tailored to a wholesaler’s volume which make it virtually impossible for one to survive without it – and the only way they can lose it is by selling AMD or Transmeta chips. Use Intel, stay afloat. Sell AMD, go out of business. Unless you’ve got the balls to abandon Intel entirely, and apparently even IBM doesn’t, they own you.
3. Startup costs for new CPU production facilities is in the neighborhood of 3-4 billion dollars. That’s why there aren’t lots of small startup companies competitively nipping at Intel’s heels now and there never will be.
4. AMD is being forced to sell its superior CPUs at prices well below their worth, because of Intel’s rebating practices which make it uneconomical for wholesalers and integrators to use AMD’s chips. They couldn’t afford to lose their rebate money even if AMD’s CPUs were priced the same as Intel’s, despite their superior performance.
5. If AMD can’t make money selling its products because Intel is so actively working at destroying them through abuse of their monopoly power, they can’t afford to produce better products and greater quantities of those products because of the prohibitive costs of new production facilities as discussed in #3.
There is a LOT more going on here than simple free market economics.