Is Dell too Late

By John G. Spooner  |  Posted 2006-05-18 Print this article Print

to the Party?"> The way some analysts see it, Dell is giving the market what it wants, even if it is late to the party.

"Customers have been clamoring for Opteron-based servers for a while now," said Roger Kay, president of EndPoint Technologies Associates in Wayland, Mass. So "Dell is responding."
Charles King, an analyst with Pund-IT Research, said it was about time Dell made this decision.
"Its a reflection of the market," said King, in Hayward, Calif. "Its a tough time for IT sales, and you stick with your formal and informal partners as long as you can. But if theres a competing product thats having so much success that your customers are looking elsewhere, you need to make a decision." King said he was surprised that Dell held out for as long as it did, probably under the mistaken belief that Intel would be able to come out quickly with products that would overrun AMDs offerings. However, Opteron has carved a place for itself in the marketplace, and it isnt going away, he said. "Opteron was a great product and it continues to be a great product," King said. "It would behoove Dell to get this as quickly as possible, because Opteron is here to stay." The Dell-Opteron announcement, however, comes after several difficult quarters for the PC maker, culminating in an atypical slip in which the PC makers unit shipment growth fell below that of the market as a whole in the first quarter of 2006, according to IDC and Gartner Group. Dell continued to lead the market in overall unit shipments, with a market share of between 16 and 18 percent, according to initial quarterly estimates by IDC and Gartner Group, released on April 19. But its unit shipments increased by about 10 percent versus the market rate of about 13 percent, according to the firms. "The growth engines in the market are the areas that [Dell] doesnt play in," said Richard Shim, analyst at IDC in San Mateo, Calif. Those markets, Shim indicated, include indirect sales channels to businesses and retail, in addition to selling AMD-processor systems. AMD executives were naturally pleased with the development after having gained the business of IBM, Sun and Hewlett-Packard in the server space with its Opteron chip. Dell "will be introducing an Opteron-based [multiprocessor] server by the end of the year. Were very pleased with that," said Marty Seyer, vice president commercial business and performance computing at AMD in Sunnyvale, Calif. Click here to read about how HPs PC group made gains while Dell slipped. "Theyve been evaluating [our] technology for some time. We knew it was a matter of when, not if, theyd be announcing an Opteron server. Were particularly pleased theyre announcing one at the high end." Seyer declined to say whether Dell was working on other AMD products. However, he pointed out that few Opteron customers have used just one product in its Opteron line. Most offer several products based on the chip, he said. Intel appeared to take the news in stride. "We appreciate that Dell shows strong support for the bulk of our product offerings and believes in the strength of our roadmap," an Intel spokesman said in an e-mail. "Our intent is to deliver on that strong product roadmap and support Dell and its customers such that they desire Intel platforms." "The MP niche has been a challenging one but our next generation Intel Xeon processor MP, [code-named Tulsa], shipping in the second half of 2006, will provide a competitive product" to the Opteron, he said. Editors Note: This story was updated to include comments from analysts as well as Dell, AMD and Intel executives. Check out eWEEK.coms for the latest news, views and analysis on servers, switches and networking protocols for the enterprise and small businesses.

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.

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