Dell Clarifies AMD Retail Strategy

While Dell is moving most of its AMD-based consumer products to retail stores, it will continue to sell PCs and servers with the chips online.

Dell is clarifying its retail strategy when it comes to PCs that use processors from Advanced Micro Devices.

In a Feb. 8 posting on the company's Direct2Dell blog, Lionel Menchaca, a digital media manager for Dell, wrote that the majority of its Inspiron line of desktops and notebooks that use AMD chips will now be available only through retail stores.

However, Dell will continue to sell some of its AMD-powered consumer PCs online, along with its line of enterprise notebooks, desktops and servers that use AMD microprocessors. Menchaca's posting was in response to several reports that Dell had dropped AMD-based products from its Web site.

"Dell regularly adjusts its product offerings, and how customers can purchase those products," Menchaca wrote. "Currently the majority of our Inspiron AMD-based systems are available through our retail partners such as Wal-Mart, Best Buy and Staples, and through telephone sales."

Dell began selling PCs through retail stories in 2007. Menchaca's blog seems to indicate that the company is still adjusting to this new sales model and is trying to fine-tune its approach to consumers.

One reason why Dell might have moved some of its AMD-based machines to retail is to keep its Web site reserved for more high-end products. Most of the users who shop at Dell's Web site are more sophisticated and willing to spend more money on PCs that use a range of high-end Intel processors, said John Spooner, an analyst with Technology Business Research. However, Spooner said he expects that the decision may anger some loyal AMD customers who pressured Dell into offering the chips with its PCs two years ago.

Dell and other PC vendors, such as Toshiba, also use AMD processors for lower-end PCs that make their way into retail stores. Since vendors have to split the profit with the stores, it makes more sense for Dell and Toshiba to use the retail channel to move the systems that have AMD processors, which cost less to buy and help bulk up their margins on the back end.

"In retail, the margins are lower since Dell has to split its margins with the retailer, so using lower-cost AMD processors makes a lot of sense in this case," Spooner said.