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AMD and Dell at Last?
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Old 2nd July 2004, 03:15   #1
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Default AMD and Dell at Last?

Dell's "special relationship" with Intel has traditionally meant that when Intel releases a new product, Dell gets first crack. This works out great as long as Intel's driving the chip-design horse. But many industry experts have pointed out that AMD has a long history of design wins over Intel, and the recent decision by Intel to offer a chip modeled on Opteron silicon represents a bit of a watershed. These chips can process data at 32 bits, but can scale up to 64 bits for more calculation-intensive applications.

But AMD's been claiming design and processing speed victories for years. Nothing has really helped: Intel still has the outward appearance of a juggernaut, and AMD's various production problems over time have given manufacturers just enough excuse to stay with the proven leader in Intel. AMD hopes that by breaking into some Dell designs, Joe Consumer's perceptions would begin to change. For whatever reason, the fact that Hewlett and IBM, among others, have launched AMD-based products isn't as important to perception as whether the dam breaks at Dell.

This would spell trouble for Intel. Not because Dell is suddenly going to start throwing Intel chips and designs onto the slag heap -- I'd expect that the amount of AMD-driven gear that Dell would sell would comprise a small portion of its overall gross. But given Dell's special relationship with Intel, the only reason that the company would move to the Opteron or Athlon chips from AMD would be due to customer demand. The PC business remains quite hairy and brutally competitive. Due in no small part to its growth trajectory and superior economic model, Dell used to be able to be a bit schoolmarmy with its customers, in effect saying "We choose Intel because it's the best for you." But if customers are demanding AMD, then what does this say about Intel's carefully groomed image?

Let's not start carving Intel's tombstone just yet. In fact, a Dell spokesman has flatly denied claims that the company has plans currently to offer products based on AMD. Until such an announcement takes place, this is just a rumor, coming from an analyst who may simply be trying to make a name for himself. Or it could be that he's done some excellent primary research. Whatever the outcome, he's managed to re-ignite the rumor that just never seems to die. Regardless of what happens with Dell, it seems clear that AMD and smaller Transmeta (Nasdaq: TMTA) are finally prying into a world that was once Intel's own private oyster.

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