Posted on 05/18/2006 2:50:49 PM PDT by nickcarraway
SAN JOSE, Calif. — In a major shift in strategy, Dell Computer Corp. on Thursday (May 18) said that it would roll out new servers, based on microprocessors from Advanced Micro Devices Inc. The disclosure, revealed in Dell’s first-quarter results, indicated that the PC giant would introduce new servers based on AMD’s Opteron line of 64-bit processors by year’s end.
The news represents a boost for AMD (Sunnyvale, Calif.), but it is also a major blow for Intel Corp. (Santa Clara, Calif.). Since its inception, Dell has primarily used x86-based microprocessors from one vendor: Intel.
Dell will continue to use Intel’s processors for most of its PC lines, analysts said. In the financial release on Thursday, the computer maker also said that it would “launch new ninth-generation servers featuring Intel's Woodcrest microprocessors.”
Later this year, Intel is expected to ship its new processor line, which is based on a next-generation architecture. Intel’s codenamed for the server-based processor line is Woodcrest.
But still, Dell has been losing market share, especially on the server side. The company’s competitors have been grabbing share away on the server side by developing systems based on AMD’s successful Opteron line, according to analysts. In fact, Dell’s own sales force has been urging the company to adopt AMD’s Opteron chips in an effort to regain lost share.
Dell’s shift to AMD’s parts have been somewhat expected for months. In January, analyst Doug Freedman of American Technology Research Inc. indicated that Dell and AMD would make an announcement in March.
For weeks, however, Dell dismissed the rumors, saying that it had made no decision about using AMD’s parts.
Then, in March, Dell began to move towards AMD by acquiring high-end PC supplier Alienware Corp. Freedman characterized Dell’s proposed acquisition of Alienware as a way for the computer giant to "back its way" into a relationship with AMD. Alienware makes high-end PCs based on chips from both AMD and Intel.
Now, Dell is scrambling to embrace AMD — and for good reason. For the first quarter, Dell reported sales of $14.2 billion, down 6 percent sequentially but up 6 percent from a year ago. It reported a profit of $762 million in the period, down 25 percent sequentially and down 18 percent from a year ago.
"The competitive environment has been more intense than we had planned for or understood," said Kevin Rollins, Dell's chief executive, in a statement.
"Over the last year, we tried to achieve both growth and increased levels of profitability, which allowed our competitors to improve their relatively low levels of profitability and accelerate their growth,” he said.
“We have now taken action to reignite our growth and reassert the unique value of our direct model,” he added. “We are re-establishing our price position, investing in customer sales, service and support, building our product and technology leadership and improving our cost structure and productivity. All of these actions will enable Dell to optimize the significant potential we have for global growth at a time when we expect our industry to undergo significant change and consolidation."
Specifically, Dell is focusing on three areas besides its new product efforts. First, the company is investing more than $100 million to regain its leadership position in customer experience.
More than 2,000 new sales and support personnel have been hired in the U.S.; call centers have been added or expanded in Ottawa, Oklahoma City, Manila and Nashville.
By the end of the fiscal year, Dell will have opened 14 new manufacturing, call center and design and development facilities over a two-year period.
ping
I dunno, everything I've heard has suggested that Dell's recent fall is a result of degraded customer service, not a failure to offer AMD chips.
It finally happened..., Dell is now an AMD customer
http://forums.amd.com/lofiversion/index.php/t75643.html
Don't know, AMD captures a huge chunk of the gaming and server market share.
55-65% of most hardcore gamers run AMD chips. Which is spectacular because it has always been dominated by Intel. Dell loses out on that.
I bet those AMD powered Dells would do an amazing job for our FR folding team
http://www.freerepublic.com/focus/f-chat/1633697/posts
I agree that Dell is certainly not a sexy name for gaming systems, for lots of reasons. But I don't think putting AMD's inside Dell boxes helps them there. The AlienWare acquisition does, but no respectable gamer I can imagine would buy a Dell just because you have very little control over the make of the internal boards, which often end up being refurbished crap. High-end gamers want all new boards, all new memory. An AMD chip isn't going to solve that.
The server market is a more promising opening, but the conventional wisdom of Dell's customer service declining (mostly through off-shoring) is not going to fill an IT manager with warm fuzzies.
Not that I'm super-expert-man on this or anything. It's not like I manage an IT department or anything (though I do help with IT functions at my company), and it's possible that this will really help Dell, but I try to keep current on IT sites like SlashDot and Dell's reputation there is not good and it has nothing to do with their failure to offer AMD.
Just servers? They need AMD for the gaming market too - I just ordered to Laptops from HP because I couldn't get AMD from Dell.
Servers is where they're hurting the most, because multi-chip Xeon systems can't come close to competing with multi-chip Opteron systems (major memory bottleneck for the Xeon).
Actually, we did too for the same reasons, funny coincidence! :)
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