Analysis: One small step for Dell, one giant leap for AMD

Round Rock (TX) - "Why did it take this long for two old boys from Texas to finally get together?" asked Jim McGregor, principal analyst and author of In-Stat's Microprocessor Report last night. "When you talk about the good ol' boys' network, it doesn't get any better than Texas." Yesterday, after years of speculation, Dell finally shook hands with its partner over the next hill, sealing the deal with AMD. For the first time, multi-processor servers carrying the Dell brand name will contain AMD Opteron CPUs.

It is not an across-the-board sweep for AMD with the Dell product line, so much as it may have been, from at least one analyst's perspective, an opening of the floodgates. Dell's acquisition, announced last March, of high-end PC system builder Alienware - one of AMD's high-profile customers - may have softened Dell to the notion of finally adding AMD processors in Dell equipment, believes Doug Freedman, semiconductor analyst at American Technology Research, who openly predicted this deal would occur as far back as last January. "I think that Dell's deal with Alienware was their way of warming the market up to the idea that they were comfortable selling systems with AMD-powered processors," Freedman told TG Daily.

AMD's Opteron processors will make their premiere in Dell's high-end, multiprocessor servers, it was announced yesterday during Dell's quarterly earnings report. We don't know the specific Opteron models, nor do we know yet how Dell will brand its AMD-powered units, or how it will price them. There's a good chance these details have yet to be worked out. TG Daily has contacted high-level representatives from both Dell and AMD for comment, which may yet come today.

One of the founding principles of Dell Computer, going back to its days as "PCs Limited," advertising made-to-order systems from catalog-sized ad segments in Computer Shopper, is responding to customer demand. Customers in the high-end server market where Dell is now very well established - the #3 server vendor, by Gartner's estimates, behind IBM and HP - are demanding Opteron processors, as evidenced by the popularity of HP's ProLiant DL145 and DL385, IBM's eServer 326 and 326m, and blade servers with Opteron CPUs from both suppliers. By giving its customers the choice of AMD or Intel, Freedman believes, "I think what Dell has done is try to get a little bit back to their roots."

If that's truly the case, then why is Dell finding those roots in the server market, instead of the desktop PC market from whence it first sprouted? "Probably because [the server market] is the one place where AMD offers the largest delta in performance," answered Freedman. "I think...it's probably likely that Dell chooses to use AMD where AMD offers an advantage. Should AMD have the best part for gaming systems, I think in the future, there's a chance that they may offer AMD boxes that are targeted at gaming. But if Intel happens to have the best product at the time, I think you'll see them offer Intel solutions more heavily."

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