Dell says bowing to demand on AMD chips

/ Source: The Associated Press

The world's largest PC maker says it was merely bowing to customer demand when it decided to start offering microprocessors from Advanced Micro Devices Inc. in some of its high-end servers.

But the announcement, disclosed as Dell reported an 18 percent drop in its first-quarter profit Thursday, represents a significant change from the company's long-standing use of chips only from Intel Corp., AMD's much larger rival.

After months of rumors and some analysts suggesting that the company's Intel-only policy was hurting business, Dell said it will use AMD's Opteron Dual-Core processors in Dell's multiprocessor servers by year's end for the first time.

"We're going to bring the best technology to the market," Dell founder Michael Dell said of his company's decision. "If you look at the history of our company, we have for the majority of the last 22 years asserted a position of delivering great value and great service to our customers."

The deal is a major win for AMD, which had little presence in the server market until it released its Opteron processor in 2003. The critically acclaimed chip put Intel in the rare position of having to play catch-up with its smaller rival.

"It's a fairly small category in terms of units," Rollins said. "We will still be launching this year a broad line of Intel products. We think we've got a winning combination of bringing great technology to all customers."

Though Dell began offering AMD chips through its acquisition of high-end gamer PC maker Alienware Corp. in March, don't look for AMD chips fanning out into Dell's broader product line anytime soon, said one analyst.

"They're offering these chips where people are asking for it: in servers and high end gaming systems," said Frank Gillett, principal analyst with Forrester Research Inc. "It's not clear that they will feel compelled to offer AMD elsewhere unless people start asking for it by name."