Dell claims to use AMD chips

Dell announced it would start using chips manufactured by AMD - an unexpected event in the PC community, as it has always been loyal to Intel processors.

Source: Gizmodo

Dell's CEO said by the end of this year, Dell will use AMD's Opteron chip for one of its high-end, multi-processor server models. " However, this is just a narrow market ," added Kevin B. Rollins.

Kevin did not disclose whether Dell used AMD chips inside its computers or other server types, but still insisted that Intel is the " majority of processors for us ". During the press conference, he also briefly introduced some of the new personal computer products Dell plans to announce this year. They all use Intel chips.

Dell made the statement after its financial results in the first quarter of 2006 were announced. Its profit as of the end of May was 762 million USD, equivalent to 33 cents / share, down 18% compared to the same period last year. However, revenue increased 6% to 14.2%, mainly due to growth in foreign markets.

Dell, the largest PC maker in the world, justified the reason for lower interest rates because it lowered its price to increase market share, and invested in customer service upgrades.

There is anxiety

Information about Dell's use of AMD chips pushed AMD's share price to 13% after yesterday afternoon trading. Meanwhile, Intel's stock price fell nearly 5%. Dell's stock price itself also rose 4% to $ 23.95 per share.

Analysts wondered why Dell had to wait until now to bring AMD chips into their products. Understanding this question, Dell's CEO said Dell " must listen to the market to see what customers want. AMD is very successful, so we use their chips ," Rollins said.

He also outlined plans to improve Dell's growth rate in the near future. Accordingly, Dell will continue to lower product costs, save operating costs. In doing so, they will have to lower the cost of warranty, change some materials and components of the computer without changing the quality.

However, Dell does not intend to cut the current workforce. Instead, they recruited more than 2,000 business employees, provided new technical assistance and retrained more than 5,000 people. More than $ 100 million will be spent by Dell to improve customer service quality - which, according to Rollins, is " downgraded to hurt the image, its revenue ."

Despite a series of plans on that paper, analysts are still not out of concern about the company's future growth. " It's clear that Dell is undergoing many changes, but those changes come with countless uncertainties ," Goldman Sachs analyst Laura Conigliaro said.

Others shrugged their shoulders: " They have said any specific details about cost cutting. " However, they also acknowledge the things Mr. Rollins presented about Dell's prospects that could create both a seismic and tsunami in the empire.

Too late?

Dell's switch to AMD chips in the server line can't solve many problems, but it is a sign that Dell is ready to change. However, until now, the Opteron chip was only used, it was "too late".

Dell's main rival, HP, has been offering AMD chips for decades. Currently AMD chips are being installed in more than 30 models of HP PCs and servers. Everyone knows thanks to the AMD chip that HP customers have more choices about cost and performance.

In the area of ​​laptops, the hottest market today, Dell's growth is less than half of HP (12 versus 27%). Dell's global PC market share in the first three months of 2006 was only 18.1%, while HP was rising strongly and chasing close with 16.4%. Only in terms of desktop PC sales, Dell outperformed HP (Dell increased 3%, HP increased by 1%).

Dell claims growth in overseas markets is an important factor at the moment. Rollins said sales in China rose 29%, while in South Korea it was 54% and India was 40%.

Change in the chip market

The fact that Dell eventually sold servers using AMD chips showed that the chip market is moving remarkably. For a long time, Intel has always been the sole and unique supplier in Dell. In close relation, the AMD article was only shaken until recently, with the emergence of the HP alliance - AMD.

" Even Dell has to admit that AMD provides very good server chip products, if not better, " analyst Linley Gwennap said.

For years, AMD has always been considered the shadow of Intel. Until three years ago, AMD changed some of these preconceptions when introducing Opeteron, the first server chip to run in both 64-bit and standard 32-bit modes.

Initially, Intel officials all tried to criticize Opteron's achievements and trends for the strategy of providing 32-bit chips, 64-bit chips separately. However, market developments have forced Intel to exchange cards: launching dual-mode chips like Opteron.

Opteron's original customers were giants, from IBM, Sun Microsystems and HP. Last year, Opteron accounted for 20% of the number of server chips sold in the market.

Intel itself must admit that Xeon - the server chip that competes directly with Opteron - is far inferior to its rivals. Intel is hoping that Woodcrest, the server chip expected to be released later this summer, will help eliminate performance gaps between the two.

Thien Y ( General The New York Times, AP )