Growth Formula

By John G. Spooner  |  Posted 2006-08-17 Print this article Print

"The question has always been why Dell never did AMD," said Richard Shim, an analyst with IDC in San Mateo, Calif. "It works to make [Dell] more price competitive and it s worked for others in a very key segment, the consumer segment, which ahs been driving a lot of the growth in the industry." So, Shim said, the question now becomes can Dell make it work with AMD?
Rollins thinks so. The Dell CEO said offering AMD chips gives its customers—both consumer and corporate—greater choice, while also giving Dell an edge on processor costs. The AMD product line has incurred some start-up costs, Dell executives admitted. But they expect them to quickly turn into profits.
Dell is likely to take the wraps off of its new AMD-powered Dimension desktop ahead of its Sept. 12 analyst meeting in New York. Meanwhile, it plans both two-processor and four-processor PowerEdge servers for the second half of the year as well. Previously, the company had only disclosed a plan to deliver a multiprocessor, AMD-based servers by the end of 2006. Click here to read more about AMDs new Opteron processors. Whether or not Dells new AMD products catch on, Shim said, Dell still has to worry more about itself and its recent missteps than anything—even HP. HP on August 16 reported strong second fiscal quarter results that included its PC arm reporting an 8 percent year over year increase in revenue and a 14 percent gain in unit shipments. Right now, "HP is hitting on all cylinders," Shim said. "But Dell can still do that. Its just that it hasnt for many reasons. It hasnt had the right products, it has not priced them correctly and it hasnt helped customers the way it did the past. This is what has lead to its growth slowing down." Growth is the "overarching thing there. Dells always been so phenomenal because of its high growth rate. It used to outpace the market. After the bubble burst, it was the only one that was growing. Now its growth has slowed down and the other guys that were faltering are still going strong and Dell isnt—at least not as fast," Shim said. Meanwhile, Dell will continue offering Intels latest processors in its computers. It has adopted Intels Core 2 Duo, for example, in desktops and will soon add the chip to its notebooks, Dell executives said. "We love them both," Rollins told reporters. "We think there is great, exciting technology form both" AMD and Intel. Editors note: This story has been updated with information about the SEC inquiry and with additional information about future Dell AMD-based products. Check out eWEEK.coms for the latest news in desktop and notebook computing.

John G. Spooner John G. Spooner, a senior writer for eWeek, chronicles the PC industry, in addition to covering semiconductors and, on occasion, automotive technology. Prior to joining eWeek in 2005, Mr. Spooner spent more than four years as a staff writer for CNET, where he covered computer hardware. He has also worked as a staff writer for ZDNET News.

Submit a Comment

Loading Comments...
Manage your Newsletters: Login   Register My Newsletters

Rocket Fuel