Dell to use AMD Chips in Desktop PCs

bain writes "MarketWatch reports that Dell has decided to use AMD chips in its Dimension desktops due next month. The move to use AMD chips signals a break from its long standing reliance on Intel chips. The information slipped out of Dell's quarterly earnings report." From the article: "Before the announcement, which had been speculated in the financial community and the press, Morgan Stanley analyst Mark Edelstone wrote in a research note: 'It should have a negative impact on Intel and it could be a large offset to the expected benefits from Intel's restructuring efforts.' AMD, which has become a more formidable competitor to Intel, has been expanding its manufacturing capacity, a sign that it expects to be shipping more chips. Its chief goal is to put itself in position to supply 33% of the global microprocessor market by 2008. "

Comments

Wow.

[Enoxice]

Hopefully, this will spur even more innovation from both camps than we've been seeing recently. If you thought the new processor offerings were impressive before, wait until you see Intel fighting back against this move to try to regain some market share.

I'm excited.

though I'm still not going to buy any computers from Dell)

Re:Wow.

[Anonymous Coward]

If you thought the new processor offerings were impressive before, wait until you see Intel fighting back against this move to try to regain some market share.

Yeah, I'm sure that it will be impressive innovation, like coming up with a new copyrighted name for a processor or something. As someone who worked in the semiconductor industry for many years, it is my opinion that Intel's greatest innovations have been in the area of hard-nosed marketing strategy.

Re:Wow.

[Gr8Apes]

They're faster, but not necessarily cheaper, certainly not when combined with a motherboard.

Power usage is comparable, from the tests I've seen, with the Core 2 using a little less power at full load, but more power idling. Do note that this is against 3 year old tech.

I'll be eagerly awaiting next year's releases.

Re:Wow.

[insanarchist]

Intel were no doubt developing the core processor back then, or at least researching it, but the delay from idea to reality can be a very long process. The biggest mistake Intel made was assuming the Netburst architecture could be easily ramped up to 5+ Ghz, or that raw Ghz would still be the biggest influence on processing speed. Hyperthreading was a precursor to multicore processors, idea-wise, and hyperthreading has been around for quite a while.

Just sayin'.

Re:Wow.

[Doctor Memory]

The biggest mistake Intel made was assuming ... that raw Ghz would still be the biggest influence on processing speed

I doubt they made that mistake, I think it's more likely they saw that raw GHz was the biggest influence on purchasing decisions. Why do you think AMD revised their processor numbering scheme to emphasize "apparent" processor speed? Do you honestly think your average computer buyer would pick a dual-core 2.2GHz processor over a 3GHz single-core, even though the dual-core may have 40% better[*] throughput?

I agree that NetBurst failed to scale to the degree that Intel was hoping, but I'm sure marketing was one of the largest driving forces behind driving processor speeds at the expense of almost everything else.

* Numbers courtesy My Ass Research Associates

Strange timing?

[jeffmeden]

Dell announces the support of AMD chips in it's desktop lineup, on the heels of Intel's release of a cost/performance competitive desktop chip offering in the form of "Core 2". This sounds like a decision they made 2 years ago, that just now floated through the corporate channels into effect. Along with the other bad news we have been hearing from Dell lately, is it going to mean rough times ahead?

Re:Strange timing?

[Chris Burke]

Companies like Dell don't flip-flop just because the performance advantage has changed, or all the companies that were selling both Intel and AMD would have dropped Intel to only sell AMD, and vice versa, as the competitive advantage changed in previous years.

While AMD's recent performance leadership (and more importantly 64-bit and server infrastructure leadership) have definitely had an impact on Dell's decision, the only thing that really would have made Dell change their tune is customer demand. Dell is selling AMD parts because their customers want it, and they're going to continue to do so as long as their customers want it.

I think what's happened is that AMD has earned respect and is now seen as a true viable second source by even the most conservative of agencies, and given the choice most really would prefer to have a second option -- even if they buy all their computers from Dell.

Perfect timing, Dell!

[otis wildflower]

You miss out on all the phat AMD lewtz while they completely dominated Intel for years and years, and you finally decide to piss Intel off and start using AMD..... Just in time for Intel to take back the performance crown!!

The only thing that would be better would be for you to "repent" and go back to exclusively Intel as soon as AMD's next gen launches.

But you're not that stupid. Are you?

Re:Perfect timing, Dell!

[rolfwind]

I imagine that a Company like Dell can dominate and get a really sweet deal from AMD for their processors without being exclusive - something that offsets the exclusive contract they had with Intel. The performance crown does not really matter because it will probably change hands several times in the next few years, but AMD is still better for the Server Space - once Dell switched to that and got their Intel exclusivity contract voided, they might as well have AMD options down the line.

I also wonder how Intel is handing out C2D processors - are they giving Apple or Dell first dibs or do they have enough all around?

New deal with Intel?

[Jeppe Salvesen]

I mean - Dell had a super deal with Intel. Then Apple cut a deal with Intel. And now Dell is embracing AMD.

Interesting.

Anyhow, here's what I expect happened:

Once Dell committed itself to AMD servers, then the deal with Intel was invalidated. This was a known: Dell gambles that the increased sales will offset the lost savings. Also, the move towards AMD will (Dell hopes) reinvigorate Dell's image. Currently, we think of Dell as being a boring, greedy company producing yesterday's solutions.

Ironically, this happens at a time when Core 2 Duo finally seems to win Intel the performance upper hand for the first time in a long while.

Re:Cutting down HP and Gateway

[grapeape]

If they were really wanting to beat down HP and Gateway they would address their customer service issues before they worried about switching processors.

Re:Impact on Enthusiasts?

[bazmail]

Nope. newegg and co. will just have more Intel chips. Its the circle of life.

Dell & mergers

[Kuvter]

Dell bought out Alienware a few months back and didn't 86 AMD from Alienware's line up. I don't think it's a big shocker that Dell will now sell AMD's in their main online store. For all we know it might just be the rollover from Alienware's warehouse.

What I'm more interested in is what'll happen because of the ATI and AMD merger.

Re:It's opposite land!

[stienman]

Don't worry too much. "Dell switching to AMD?" is announced every six months for the last umpteen years. I usually see it as an opportunity for Dell to make a new deal with Intel.

Maybe it'll actually happen this time, but if it does it'll still be 6 months or more before you see them for sale.

But if it doesn't happen, you'll know that Intel (or Dell) caved. Again.

Purely from a business standpoint, it's certainly easier and cheaper to support, stock, and build based on one architecture. Further, most businesses want to purchase Intel products, rather than AMD - it's the safe bet. "you'll never get fired for recommending wintel..."

-Adam

Magic Genies

[shoolz]

I like AMD, but Dell could put magic genies in their boxes and I would never buy one. Generally non-upgradeable, pre-installed spyware, and abysmal tech support.

My mother spent 6 months on the phone to India 'tech support' trying to get her box to stop hanging until the Dell tech finally came and swapped her NIC.

Put what you want in the box, Dell, I and anyone else in the know ain't buying.

It's all about market share and profitability

[Leperflesh]

As geeks, we're most concerned with the top-of-the-line desktop chips. But it's a mistake to think that's the most important factor in the market. Companies like Dell don't make the majority of their profits from highly-informed, single-PC-buying gamers and linux nerds. Their bread-and-butter is the business desktop and server market, followed in second place by the fairly uninformed home PC buying family.

For businesses, decisions about what to buy are made on a large scale, based more on budgetary and standardization factors than on which chip has the absolute top performance in its price class this week. My company picks a standard model and sticks to it for months at a time, sometimes more than a year. It might buy thousands of desktops and laptops during that time, as well as dozens or a few hundred servers.

Dell is just trying to grab market share. AMD owns 20% of the desktop market now. That Intel's Core Duo is the price/performance winner this month is a blip on the screen - the larger trend is all that matters to Dell. They need to get at that 20% of the market they're missing, because it represents money left on the table in their primary sector. No business can stay in business if it is in the habit of leaving its customers' money on the table.

What has been holding Dell back historically is twofold - sure, there's whatever exclusive deal they had with Intel, and that is significant. But there's also the (historical) inability of AMD to ship large quantities of a given part on release. Dell does not want to be in the position of turning down or delaying shipment of large orders by its most important (corporate) customers, for lack of parts. AMD has only recently (in the last two or three years maybe) been able to show reliable ability to ship the kinds of quantities that Dell requires. So, now that it can, it becomes a Dell vendor.

So, it doesn't matter all that much to Dell if Intel's Core Duo is in the lead currently. That's a short-term question, of what to package on its current models next quarter maybe. Right now it is concerned with meeting the demands of existing customers, and those existing customers are working from certified models and budget numberes that were determined on paper months ago. I doubt any major company is purchasing Core Duo machines for its employees this week - very few are that proactive and quick with purchasing decisions.

As for next quarter, and the quarter after that - well, Dell will use whatever part makes the most sense, for each model in each product line at each price point and discount level. For some, that probably will mean a core duo platform - but assuradly, now that they have signed the agreement, they will have some Athlon models - and they'll sell some. I'd expect AMD single-chip (dual and single core) desktops to make up something like 5% to 10% of next quarter's shipped desktop units, and maybe a good 15% of next quarter's shipped server units.

Dell's home market will be mostly mid to low-end dell desktops, using whatever chip is at the $50 to $80-each (in 1000-tray quanitites) price point that month. Leaving AMD out of that equation would be a mistake, again irrespective of Core Duo vs. Athlon 64 x2 price/performance points. The cheapest Athlon 64 X2 is still well above $100 each in quantity - and Core 2 Duo is around $200 minimum. They are only a small portion of even the home desktop market at this point, so which of the two is fastest isn't really that relevant to Dell.

-Lep

Not surprising. ATI and NY Fab were hints.

[WoTG]

The rumors had been making a LOT more sense the last couple months, so it got to the point where I figured the Dell deal was already signed.

First, Dell had already broken it's Intel only stance by committing to offering AMD Quad CPU servers.

Second, the ATI purchase and NY fab announcements were so close together that for the banks to finance the purchases (with loans rather than shares!), someone signing the loan offer had to be very convinced that business was going to be growing.

Third, Dell isn't stupid. AMD's share, especially in servers, was getting to the point where Dell would start to loose a noticable number of corporate sales. If a mid-sized company wants to standardize on one vendor for servers and workstations, then sooner or later Dell starts to loose workstation and laptop sales. The Opterons were that good in the server area -- and while Woodcrest servers seem to be excellent, it's a new server architecture, and it takes a lot of time for a company to validate a new CPU.

Lastly, AMD has all the pieces of the puzzle now. They've got more than one fab (granted they're next door to each other, but at least they've started production via a contract fab, Chartered). They've got the full range of chips -- the Turion mobiles are reasonably power competitive. And with the ATI purchase, AMD is able to offer the complete reference design and support.

So, IMHO it was a matter of time.