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Dell embraces AMD in the server market

Intel Canada claims it can win back the business, but analysts say floodgates may be opening

Months of speculation of a Dell and Advanced Micro Devices (AMD) partnership were confirmed after the PC maker announced that it will use AMD’s Opteron chip in multi-processor servers by the end of the year.

Dell’s initial embrace of AMD will only involve servers with four processors, and the company has no plans to sell AMD’s chips in desktop PCs, notebooks or other servers.

“We can do better in the multi-processor space and Opteron can fill a hole there,” said Dell’s CEO Kevin Rollins during a conference call with industry analysts.

Rollins said that “a clear acceptance of AMD in the market along with its success in the high-end server space” led Dell to include the chipmaker into its partner ecosystem.

While this announcement breaks Intel’s long-running exclusive relationship with Dell, Doug Cooper, Intel’s Canada country manager, said it will have little impact on their partnership.

“We’ll work hard to win back all of their business. We’ve had a good, long working relationship with them,” he said.

Cooper added that the next generation Intel Xeon processor MP, code-named Tulsa, shipping this summer, will compete with AMD’s line up.

Gordon Haff, an analyst with Illuminata, said “this can be painted as yet more bad news for Intel, but in the context of Intel’s total business relationship with Dell, this is, at least today, really an event of no consequence as far as chip volumes are concerned.”

The expectation, according to Haff, was that Dell would introduce Opteron in a higher volume space. “This is still a relatively tepid embrace of AMD on Dell’s part,” he said. “It’s going into one server model, one that is a relatively low volume area for Dell and not even available for six months or more.”

But according to Michelle Warren of Evans Research Corp. of Toronto, the AMD Opteron server line wins a lot of kudos from system builders and in benchmark tests. “I’m not surprised they’re entering the relationship with an AMD server chip,” said Warren. “It’s gaining popularity in the end user community.”

Warren added that Dell also likes to focus on industry standards and “bringing AMD into the server space is an acknowledgement that the chipmaker has broken through a bit of a barrier and is now more widely accepted.”

Following Dell’s recent acquisition of Alienware, which uses both Intel and AMD in its products, AMD’s entry into Dell’s PC and notebook space may be imminent, said IDC Canada analyst Eddie Chan.

“This is really showing that Dell is listening to their customers,” said Chan. “IT managers are trying to control data centre costs and AMD processors are running a little cooler than Intel,” he added. “The whole concept of performance per watt is resonating with customers who are looking to lower their costs and that’s an important element to Dell adopting AMD.”

Although John Taylor, AMD’s director of product communications, would not speculate on where the relationship will go, he said “from an historical perspective, the pattern has been that OEMs don’t just stick with one AMD product.”