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Dell embraces AMD processors

Posted: 23 May 2006 ?? ?Print Version ?Bookmark and Share

Keywords:Mark LaPedus? Dell Computer? Advanced Micro Devices Inc.? AMD?

In a major shift in strategy, Dell Computer Corp. said that it would roll out new servers, based on microprocessors from Advanced Micro Devices Inc (AMD). The disclosure, revealed in Dell's Q1 results, indicated it would introduce new servers based on AMD's Opteron line of 64bit processors by year's end.

The news represents a boost for AMD and a major blow for Intel Corp. Since its inception, Dell has primarily used x86-based microprocessors solely from Intel. Dell will continue to use Intel's processors for most of its PC lines, analysts said. In the financial release, the computer maker also said that it would "launch new ninth-generation servers featuring Intel's Woodcrest microprocessors."

Despite the shift to AMD, Dell has been losing market share, especially on the server market. The company's competitors have been grabbing market share by developing systems based on AMD's successful Opteron line, according to analysts. The company's own sales force has been urging the company to adopt AMD's Opteron chips in an effort to regain lost share.

Dell's shift to AMD's parts has been expected for months. In January, analyst Doug Freedman of American Technology Research Inc. indicated that Dell and AMD would make an announcement in March. For weeks, however, Dell dismissed the rumors, saying that it had made no decision about using AMD's parts.

In March, Dell began to move towards AMD by acquiring high-end PC supplier Alienware Corp. Freedman characterized Dell's proposed acquisition of Alienware as a way to "back its way" into a relationship with AMD. Alienware makes high-end PCs based on chips from both AMD and Intel.

For Q1, Dell reported sales of $14.2 billion, down 6 percent sequentially but up 6 percent from a year ago. It reported a profit of $762 million in the period, down 25 percent sequentially and down 18 percent from a year ago.

"The competitive environment has been more intense than we had planned for or understood," said Kevin Rollins, Dell's chief executive, in a statement. "We have now taken action to reignite our growth and reassert the unique value of our direct model. We are re-establishing our price position, investing in customer sales, service and support, building our product and technology leadership and improving our cost structure and productivity."

- Mark LaPedus
EE Times




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