Despite denials from Dell CEO Kevin Rollins that Dell Computer will not partner with AMD, it is my guess they will sooner rather than later.
Dell has always relied on Intel chips for its hardware and the main reason for that is simple: supply. Intel has the facilities to produce the kinds of quantities Dell is looking for. AMD has not, but what AMD has today is something Dell doesn’t and desperately needs. That is mindshare. AMD Athlon and Opteron chips are fast and built for running servers and workstations.
IBM, Sun and HP have joined the program and are shipping AMD-based hardware with success. Dell has been left out because it is again late to the game.
Don’t get me wrong. Intel chips do run servers and they do a great job, but for Intel it is about gigahertz and not raw speed. AMD made a calculated bet on speed and it seems to be gaining ground.
Now, Intel still beats AMD in market share by a good margin. According to recent figures from ATR Research, AMD market share is at 35 per cent.
Intel has noticed this and has countered with an historic deal with Apple Computer to put their chips on Macs.
Dell’s recent stock woes are a clear indication the once great direct dealing power is hurting.
Dell’s mantra is market share and without it the company does not have the leverage it needs to keep prices down and in its favour.
AMD is holding all the cards here and does not need Dell. They have sold every processor they have manufactured. True, they do have another facility up and ready to go if needed. When the Dell deal is finalized that facility will become operational. However, do not expect Dell to get the sweet heart deal it currently has with Intel. AMD does not need Dell. It is Dell that needs AMD. AMD is fine supplying chips to IBM, Sun, HP and the system builders.
Intel has already covered itself with Apple. The only one left without a plan is Dell, except to beg their Texas-based cousins to help them out. And, believe me they will. When this deal is done, however, it will be the channel that again gets knocked down a peg.
AMD may not favour Dell initially because they already have IBM, Sun and HP ahead of Dell, but certainly the direct seller will go ahead of the system builders. Supply could be a problem going forward, but needless to say dark days may loom for Dell so long as it drag its feet with AMD.
