October 26, 2004 4:00 AM PDT

For Dell and AMD, a tantalizing question

ROUND ROCK, Texas--Will Dell take the AMD plunge?

One of the chief questions in the PC market for the next couple of years will be whether the computer maker will incorporate Opteron or Athlon chips from Advanced Micro Devices into its systems. Intel's release of chips that can provide a similar 32-bit/64-bit functionality--one of the key factors of Opteron's popularity--has likely tabled the issue for now, according to several analysts.

But there are other factors at work, too. AMD is gaining customers in the corporate world--20 of the Fortune 100 have installed Opteron servers. The Sunnyvale, Calif.-based company has also shown that its technology can equal and even best Intel's.

News.context

What's new:
AMD is making gains in chip technology and corporate customers--and now Dell executives are getting more generous in their praise for the company.

Bottom line:
The compliments are all well and good, and could be a favorable omen. But AMD is still waiting for the PC giant to actually adopt its chips for use in Dell systems.

More stories on these two companies

Dell certainly has good things to say about AMD. In interviews with CNET News.com editors and reporters at the company's headquarters here last week, numerous executives extolled the strides the Intel rival has made in designing and manufacturing server and desktop chips.

"AMD has been getting much better at turning out their technology, and their technology has improved," said Kevin Rollins, Dell's CEO.

"We see the technology gap closing," added Jeff Clarke, senior vice president of the Dell Product Group, who noted that AMD came out with the first 32-bit/64-bit chips and may beat Intel to the punch with the release of dual-core processors that will significantly boost performance in servers. "You could argue that in those two particular cases, they (AMD) are leading," he said.

Then, as quickly as the compliments come, Dell executives list a host of reasons why the company won't make the move to AMD, sounding somewhat like a person who likes the sound of escargot but doesn't want a plate full of snails. The executives say few of Dell's customers are asking the PC maker to offer Opteron-based servers, and Dell continues to grow far faster than its competitors. Business buyers tend to be more comfortable with Intel chips, given Intel's powerful brand and historical ability to mass-manufacture processors.

"We still don't see a strong demand from our customers, and nothing has changed about our strategy going forward," said Steve Felice, vice president of Dell America's Corporate Business Group, who manages relationships with the Fortune 2000.

Adopting AMD chips would also require that Dell design and build new lines of computers, adding cost and production complexity. For a company that devotes resources to shaving seconds off the length of time it takes a factory worker to pull parts out of a bin, that's not good.

"We're the most successful PC company on the planet and we don't have AMD," Rollins said.

The CEO himself emphasized that he has no interest in handing AMD a symbolic victory by using the company's chips in a low-volume model.

"Could I do it?" he asked rhetorically. "Yeah, but why?"

Additionally, AMD gives Dell a lever. Sources say Dell has been on the verge of deals with AMD a number of times, only to back away late in the process after wringing concessions from Intel. (Microsoft similarly awarded Intel the Xbox contract at the 11th hour.)

"They have come close many times. Dell has profited tremendously from AMD participating in the process, without ever having to deal with AMD," said Nathan Brookwood, an analyst at Insight 64. "I think of it as Lucy holding the football for Charlie Brown."

CONTINUED: On the bright side for AMD…
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11 comments

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Mmm, okay.
It's nice to hear that Dell is FINALLY warming up to AMD on the bussiness end, but what about the home-user end? I, for one, don't buy PCs with Intel chips in them, and never plan to, so what will ever intice me and those geeky AMD lovers like me to buy into Dell?
Posted by (22 comments )
Reply Link Flag
Used to be a Dell customer...
haven't bought a Dell since the Athlon came out. Guess they don't miss me, but then again I don't really miss them either and prefer AMD-based machines...
Posted by BlueInWI (226 comments )
Reply Link Flag
No demand?
When Inquirer ran a similar story about Dell and AMD last week they were swamped with letters telling them the same thing: we'd buy Dell if they only had Athlon64/Opteron.

Where I work we also have a Dell deal, which is a pity because I know from testing that the AMD chips perform better for my workload.

I think Dell just isn't listening enough to their customers.
Posted by (1 comment )
Reply Link Flag
Dells hardware is like plain vanilla icrecream
Dell needs to wake up and realize that you cannot sell plain vanilla icecream in a market full of exciting flavors. Their hardware, which was once respected, is becoming ho-hum. AMD has a lot of promising technology out now and planned for the future. Why don't they invest in an architecture that would not only be profitable now, but in the future as well. I am sorry, you may be able to convince home users to buy your PCs with "Intel Inside", but the people who buy your servers are technically savy and are looking for alternative superior products like AMD, especially since they have a lower TCO, and growing Linux support as well as Windows. Microsoft has never worked as close with AMD as they do now. Now is the time. Seize the day.
Posted by newstalk (4 comments )
Reply Link Flag
Dell/Intel co-op deal
Dell doesn't want to impact all that co-op ad funding they get from Intel by letting AMD chips in the door. I expect all the noise they're making about Opteron is Yet Another Game to squeeze their supplier for better prices. At this point Dell is the only pure-Intel PC vendor and I'm sure Intel is willing to throw money their way to keep it so.
Posted by rkhalloran (40 comments )
Reply Link Flag
Dell's not really independent
Dell has always done what the duopoly of MS and Intel have said.

A perfect example was when Dell came out with a RAMBUS
memory based system because that was what Intel was pushing.
Intel had a huge windfall to gain if RAMBUS became the new
standard so it was pushing RAMBUS very hard. Dell, being the
true Intel lackey, came out with RAMBUS systems.

Similarly, what percentage of Linux and/or bare systems does
Dell ship? Dell pushes window boxes: laptops, desktops and
servers.

Don't expect anything different from Dell. It may happen, but
Hell might freeze over too.
Posted by shadowself (202 comments )
Reply Link Flag
Think like a business
Franklin,

Dell is in the business of MAKING MONEY. NOT a political or economic statement.

It may shock you to hear this, but the biggest cost of a PC for a manufacturer is SUPPORT.

Windows will dominate for a while because:
1) Most people know how to use it - hence, lower incidence of a tech call.
2) Linux users are more likely to "tweak" the OS and system configurations - raising tech call questions.

Intel will dominitate for a little while because:
1) They disclose all processor/chipset erratas publily.
2) They are willing to recall any defective chips - unlike AMD.

It's not about selling cheaper than the competition, it's also about lowering the cost of support.
Posted by Tex Murphy PI (165 comments )
Link Flag
Too bad for Dell.
I am a strong Dell supporter but they are slowly loosing me as a supporter. I have asked numerous times about AMD support from them. More so since the new AMD64 chips have been out. I would love to buy a dell but I am now going to build one on my own. Another Dell issue(off topic) I have is their lack of a nub mouse on their new laptops. I will still recomend them to other people but as for me I will have to find another source for my computers.
Posted by arthurdent3 (3 comments )
Reply Link Flag
AMD fans really wouldn't buy Branded PCs
Contrary to the posters here, I actually think Dell has a good point to not branching out with AMD products - YET.

Most of the AMD supporters I know bought AMD because it was generally cheaper. Many others bought AMD to "stick it to Intel." Only a few really got AMD chips because they beleived it was faster than any P4 out in the market.

An AMD gamer wouldn't buy from a mass-manufacturer. They either build it themselves, or buy it from a dedicated gaming company.

An Intel-Hater usually supports the little guy, and hence, usually buy white-boxes anyway.

And lastly, a person who buys PCs that are dirt cheap don't make much $$ for any manufacturer - even Dell.

In the corporate data-center world, I can attest that Up-Time is king. Fortune 500 companies pay a premium for uptime - that's why you have servers with RAID, massive amounts of RAM, multi-homed NICs, and reduntant power-supplies.

Intel's advantage is that their technologies and chips are very well proven, and tested against. AMD's track record for disclosing defects is abyssmal. Applications tested against their chips tend to be less than that of an Intel chip.

These are SOME of the factors an IT department takes into account when they buy servers. The Chip inside it matters - just as much as RAID, etc. etc. etc.

So, if an IT guy buys AMD servers and it works for them - THAT'S GREAT! But many other companies are not going to nickel-and-dime on the Processor when the few extra bucks buys them an added insurance for uptime.
Posted by Tex Murphy PI (165 comments )
Reply Link Flag
Compaq and HP sell a lot of Athlon processors too.
Compaq and HP sell a lot of computers with Athlon processors too. I tend to buy computers every six months and sell teh old one on eBay. The last computer I had with an Intel processor was a 700mhz Emachine. Except for one white box that had a cheap case and a CPU fan that sounded like a leaf-blower, all my computers have been HPs or Compaqs with Athlon processors.
Posted by lingsun (482 comments )
Link Flag
Dell could sell more computers if they made AMD processors available.
Dell could be increasing their sales but they're not interested. That's stupid. I might be interested in an overpriced Dell machine and paying overpriced shipping if I didn't have to buy the overpriced Intel processor that comes with it. If I could get an AMD 3200+ processor instead of the Intel equivalent and save at least $100 I might be interested. I get the idea that Dell sells mostly to people who aren't very price sensitive. I would never buy from Dell as long as I can buy a Compaq with an Athlon processor at Best Buy.
Posted by lingsun (482 comments )
Reply Link Flag
 

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