Dell Puts Its Chips on Intel

Dell sets itself apart from the competition by eschewing AMD and staying with Intel chips.

It wasnt too long ago that having technology from Advanced Micro Devices Inc. was a key differentiator for a systems maker. Now, staying only with Intel Corp. chips is setting Dell Inc. apart from its competitors.

As vendors such as Hewlett-Packard Co. and Sun Microsystems Inc. grow their Opteron-based portfolios, and as AMD continues to gain market share, Dell executives say there are no plans to introduce servers or PCs running on AMD processors.

It wouldnt make business sense, Dell President and CEO Kevin Rollins said in an interview with eWEEK.

Selling both product lines would be confusing to the sales team and customers, Rollins said. He also said Intel appears ready to catch up with AMD in areas such as power consumption and heat generation and in the performance-per-watt metric.

"Intels got a better road map coming up, in terms of performance and in terms of thermals in the coming year, so thats been very encouraging for us," Rollins said.

/zimages/2/28571.gifDell points to progress in consumer market. Click here to read more.

AMD, of Sunnyvale, Calif., over the past couple of years has beaten Intel to the punch at several junctures, including rolling out the first 64-bit x86 processors and the first dual-core x86 chips and winning the power-consumption and heat-generation battles, key issues for IT administrators seeing energy costs in their data centers skyrocket.

The result has been steady market-share gains by AMD, although Intel, of Santa Clara, Calif., still holds a dominant position.

According to numbers from Mercury Research Inc., of Cave Creek, Ariz., AMD in the third quarter saw its overall share of the x86 market grow to 17.8 percent. Intel holds an 80.8 percent share.

In servers, AMDs share grew to 12.7 percent in processor shipments. In the four-socket server space, AMDs share has jumped from about 5 percent in the beginning of 2004 to about 38 percent in the third quarter of 2005, officials said.

Dell continues to be a holdout, although it does keep AMD-based systems in-house for evaluation. Staying solely with Intel simplifies offerings for both salespeople and customers, and AMDs market gains havent reached the point where it makes sense to invest in a second product line, Rollins said.

That said, Dell is keeping an eye on the market to ensure it isnt losing too much business by not offering AMD-based systems. For now, the gains in areas such as four-socket servers arent threatening Dells financial well-being, Rollins said.

Charles King, an analyst with Pund-IT Inc., in Hayward, Calif., said Dell has always been pragmatic about such issues.

"It might be that Dell thinks they have more to lose than to gain in this area, but I think Dell has hurt itself by not pursuing this," King said. "It would benefit them to be seen as something other than a Wintel-only company."

Dell customers say they agree with the vendors decision, although some want to see Intel step up. Rackspace Managed Hosting, a division of Rackspace Ltd., has about 17,000 servers in five data centers, about one-third of which are Dell servers and the rest are Opteron-powered white-box systems.

Lew Moorman, senior vice president of strategy and corporate development at the San Antonio company, said he is pleased with the products and support from Dell.

However, Moorman said gains AMD has made in the power and heat areas are important for companies with large data centers and could force him to move to brand-name Opteron boxes if Intel doesnt close the gap.

"Were running out of data center power before running out of space," Moorman said.

/zimages/2/28571.gifIs there a chink in Dells armor? Click here to read more.

"I think AMD really made [power and heat] a priority a few years ago, and its paying off now. I understand Intel is beginning to make it a priority now, and [Dell is] aware that for us, its a major issue ... Weve had candid conversations with Dell about it, and I know were not the only one."

Tony Corradi, vice president and chief technology officer at Duckwall-Alco Stores Inc., in Abilene, Kan., said Dells Intel-only stance makes sense to him. "I somewhat agree with their AMD approach because of the cost of keeping up the two products lines," Corradi said.

For their part, AMD officials say they are focusing more on market opportunities than on whether Dell jumps aboard.

"In the near term, its not very critical to achieving the goals," said Dirk Meyer, president and chief operating officer of AMDs Microprocessor Solutions Sector.

"Obviously, weve been saying our goal is to break Intels monopoly. In order to do that ... it would sure be better to have Dell."

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