AMD, Dell And VARs
What's curious about the AMD shortage is it comes in the wake of the chip maker's blockbuster deal to supply chips to longtime channel antagonist Dell. First off, it is system builders of all stripes that put AMD on the market-share map. These trusted partners saw the performance gains that could be had with the AMD processors, took them and ran with them. Dell, meanwhile, stuck its head in the sand. If you can't supply your current longtime loyal customers, why would you take on a large contract with a channel killer like Dell and then put the screws to the partners that were backing you?
AMD has acknowledged the shortage but has failed to address head-on the system builder fury. What we plainly have here is a failure to communicate that is all too common when it comes to vendors grappling with product shortages or channel policies that rub partners the wrong way.
One good rule of thumb: Always provide detailed information about a problem and what you are doing to correct it. This is the kind of situation that screams for a public letter from AMD CEO Hector Ruiz detailing the steps the company is taking to respond to system builder demands for better supply. The AMD shortage is hitting VARs hard in the fourth quarter—the biggest and most profitable period for many VARs. To make matters worse, it comes just as Microsoft readies its first major Windows upgrade in five years. This puts Dell in the pole position to capture a big portion of the SMB and consumer desktop refresh that is likely to be driven by Vista.
Early this year, system builders predicted a big loss of margin if the long-rumored Dell-AMD deal got done. They were right. The shortage multiplies that loss. And seeing Dell touting AMD processors like they are M&Ms adds insult to injury. AMD made a big mistake here. System builders deserve an apology.
Do you think AMD owes you an apology? Let me know at (781) 839-1221 or via e-mail at [email protected].