Rumors Buzz Again About Dell Considering AMD

AMD's stock shot up Friday after press reports quoted Dell Chief Executive Officer Kevin Rollins saying his company is studying the possibility. That set off a flurry of chatter on blogs and among Wall Street traders. At the end of the day, AMD stock closed at $21.02, up $2.43 on the New York Stock Exchange.

Analysts say a move by Dell to AMD 64-bit Opteron processors would be in line with the computer firm's ambitions to push higher into IT enterprise installations.

IT industry consultant Terry Shannon, publisher of Shannon Knows High Performance Computing, wasn't too surprised by the latest twist.

"Why would Dell go to AMD," Shannon asked rhetorically. "Two words: price performance. I'm sure Dell has been considering this for a long time."

AMD Opterons would better position Dell to compete with Hewlett-Packard in lower end enterprise markets, Shannon said. He suspects Dell doesn't currently have its eye on the "big iron" server markets dominated by IBM, HP and to a lesser extent by Sun Microsystems and SGI.

Also looming is Microsoft's much-delayed 64-bit software that is likely to spur Opteron performance and growth. The Microsoft software is scheduled to be delivered next year and it is expected to work well with Opteron machines.

Intel, too, has 64-bit computing, but its high-performance Itanium machine, while boasting very high performance, is still expensive for lower performance server applications. Intel has additional 64-bit approaches but they have been somewhat late to market.

Intel isn't likely to sit back and watch AMD poach on what it has considered its territory. The firm has said it will beef up features in two future Itanium family chips, for instance. Intel has said it has been successful in improving price/performance and in trimming power consumption and there will be more improvements to come.