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AMD Sale to Dell Rumored
An anonymous reader writes "Advanced Micro Devices may be up for sale. AMD's shares were significantly up yesterday, apparently on rumors that Dell is interested in buying the American multinational semiconductor company. If AMD ends up being bought out, the purchase by Dell, or any other company for that matter, would be among the biggest the technology industry has seen. It would be of course bigger than when AMD bought ATI in 2006."
Is Dell considering making a more integrated kind of product line? Talk about a change in strategy.
And a damn good one it would be. I can't even begin to imagine the profits Dell could reap through the fruits inherited from an AMD buyout. It's much cheaper to manufacture products when you control every aspect of most of the primary components being used. And then also manufacturing facilities.. well, even more so.. wow.
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My understanding is that currently there's something of an enforced equilibrium between Intel and AMD, wherein Intel needs AMD to exist in a somewhat healthy state in order to avoid being considered a monopoly. If Dell bought AMD, what would happen to that? Would Dell then sell AMD chips to other (competing) manufacturers?
There might be something similar going on with ATI vs nvidia as well. =/
This makes total sense, this is about storage. Dell has made some other purchases recently of storage vendors, and has a line of x86 based iscsi mid level SAN products they are seeking to push.
AMD has the right technology for that. You don't need powerful number crunching and the crunching you do need could be optimized easily in the hardware. What AMD offers is good bus and memory architectures that would serve well in those more integrated applications. I suspect this is a way for Dell to continue to leverage their existing technology while giving themselves a say in the development of the features in x86,AMD64 architecture processors and their support chips. They will use that say to get the stuff they want for storage controllers.
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I seem to be in the minority, but I do not think the merger is viable
1) Antitrust issues: Normally I would scoff at the U.S. gov't stepping in and stopping and anti-competitive merger. This, however, is very high profile and would impace Intel and U.S. business as a whole. I think the private sector would push hard enough that the gov't would have to act.
2) This is antithetical to what has made Dell successful. Dell does not want to be in the business of owning production. They want to be a middle person, putting their brand on items, finding efficiencies in distribution and doing very well at it. Owning production is a different game altogether.
3) Dell would damage their relationship with Intel. As long as Dell is independent they can negotiate hard with Intel and cooperate to ensure that product offerings integrate well with Intel's products. Intel is less likely to want to do business with Dell in a cooperative sense.
Overall, I think this rumor is just a rumor. Course, I've been wrong before, and businesses have done some boneheaded moves.
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Not necessarily - average PC buyers do not buy on actual performance, and haven't for years. See: Pentium 4 sales - the NetBurst architecture that didn't perform anywhere close to as good as what AMD was offering at the time, yet everyone bought them because of the Intel brand at a higher price.
Intel's been building a massive brand recognition since the 486, even though the vast majority of PC buyers couldn't even tell you what Intel makes other than "chips".
It wouldn't be that hard for Dell to just sell the Dell brand, regardless of what's inside the box. They've already been doing that with their shoddy dielectric-bursting capacitors as it is.
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Any PC Vendor would risk putting itself at a performance disadvantage to it's Intel using competition.
Not only that, it would make competing PC vendors leery of using AMD chips.
This would be massive strategic failure for any PC vendor, hastening the slide of both the vendor business and the CPU business.
There are few potential companies that might have a good fit. IBM might be one. IBM might have the silicon expertise, funds and neutrality to keep AMD viable in the CPU industry.
I wonder how much it costs to start rumors like that whilst selling the stock short from another country.
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