Dell Changes Strategy, Will Now Offer AMD Chips

Dell, ending its longstanding Intel-only strategy in the server space, said it will begin offering servers running Opteron chips from Advanced Micro Devices by the end of the year. Though the move could be seen as a setback to system builders differentiating themselves with AMD products, many said they are not overly alarmed by Dell’s change of heart.

“Of course, whenever Dell makes an announcement that they’ll be selling products we’ve had success selling, it’s a competitive concern because they move such large volumes and use price as their favorite weapon,” said Todd Swank, director of marketing at Northern Computer Technologies, a Burnsville, Minn., system builder. “I don’t think this announcement changes things that much for how we compete with Dell.”

“For many years, we’ve offered the choice of either AMD or Intel to our customers and have a great relationship with both CPU companies,” he added. “Our Voyageur PC resellers separate themselves from Dell by offering high-quality IT solutions with professional local support. As long as Dell continues to outsource customer service and treat their customers the way we hear they treat their customers, this announcement shouldn’t have much affect on our business.”

Ben Williams, vice president of AMD’s new Commercial Business unit, believes most AMD partners will view the Dell news as a positive. “It will just reinforce that AMD has a competitive advantage from a product standpoint,” he said.

Dell, Round Rock, Texas, will actually be using AMD chips in its four-way servers, a high-end market space that accounts for a fraction of the typical one- and two-way volume server market. Gartner said about 100,000 four-way servers shipped worldwide the first quarter of 2006.

Notably, AMD claimed 48.1 percent of the U.S. four-way x86 server market in the first quarter of this year. For the same period, AMD, Sunnyvale, Calif., held 25.7 percent of the overall U.S. x86 server market. That’s up from 14.9 percent in the fourth quarter last year.

“We’re making sure that in every product category we have the best technology for our customers,” Dell CEO Kevin Rollins said on a conference call with financial analysts. “In the multiprocessor server space, we think we can do better and the Opteron product can fill a hole there,” he said.

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