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Dell to Use AMD Chips in its Servers
garfangle writes "Dell has decided to include AMD's Opteron processor in its product line of servers. This is the first time Dell has used AMD chips within its own Dell branded products (excluding the recently acquired Alienware computers)." From the News.com article: "The deal appears to be confined to servers at this point. The news came along with the release of Dell's earnings results, which were in line with the disappointing warning the company provided last week. Revenue was $14.2 billion, up 6 percent from last year, but net income slid 18 percent to $762 million. Several times during the last few years, Dell CEO Kevin Rollins has hinted that the company was right around the corner from introducing products based on AMD's chips."
It's about time Dell wised up to AMD.
update Dell has agreed to use Advanced Micro Devices' Opteron chip in multiprocessor servers by the end of the year, ending a long-standing policy of sticking exclusively with Intel.
The PC maker made the move public in its first-quarter earnings press release on Thursday. Speculation has mounted for years as to whether the company would adopt the company's chips, despite Dell's exclusive relationship with rival Intel to this point. AMD has enjoyed a performance lead in server benchmarks over Intel's Xeon processors.
"We welcome Dell, and Dell customers, to the world of AMD64," Marty Seyer, an AMD senior vice president for commercial business, said in a statement distributed after Dell's earnings release. Dell executives delayed the start of an earnings call with the press and were unavailable to comment further.
Although the deal appears to be confined to servers at this point, it still represents another win for AMD, which has had a long string of gains over its rival.
Even as it said it would launch some multiprocessor servers using AMD chips, Dell noted that it plans to launch new servers using Intel's Woodcrest microprocessors as well as desktops and notebooks with new Intel chip families.
Dell's decision to abandon its longstanding all-Intel policy comes amid less-than-stellar earnings for the first quarter. The results were in line with the warning the company provided last week. Revenue was $14.2 billion, up 6 percent from last year, but net income slid 18 percent to $762 million. Dell said it's no longer giving specific quarterly financial guidance, though it did say the second quarter should be similar to the first.
Dell said on Thursday it was accelerating its plans for $3 billion in cost cuts and will spend $100 million on improving its customer service.
Company founder Michael Dell admitted the company's performance over the last year had been disappointing. "I think there are lots of opportunities for us to do quite a bit better than we did last year," he said at the Future in Review conference Monday. "We didn't recognize how competitive the market was going to be."
Several times during the last few years, Dell CEO Kevin Rollins has hinted that the company was right around the corner from introducing products based on AMD's chips. Ever since AMD introduced Opteron in 2003, the processor has enjoyed an advantage over Intel's Xeon. During an extended period in 2005, server vendors Hewlett-Packard, Sun Microsystems and IBM were shipping dual-core versions of the Opteron processor, and Dell could offer only single-core Xeon processors.
Mercury Research analyst Dean McCarron said that a lack of AMD-based systems has hurt Dell in the server business, which, though a fairly small unit market, accounts for a disproportionate share of PC industry profits.
"They've been feeling a lot of competition from Opteron products from the other Tier 1 players," McCarron said, pointing specifically to IBM, HP and Sun.
"Presumably it got to the point where Dell had to decide what mattered more--loyalty or trying to deal with the competition," he said.
While late to the market, McCarron said, Dell could still nab a piece of the Opteron server pie.
"This is a very competitive business," McCarron said. "The fact that they have lost market share doesn't mean that they can't regain it."
Meanwhile, Dell said in a filing with the Securities and Exchange Commission that it plans to sell up to $1 billion short-term unsecured notes, known as commercial paper.