Dell *heart* AMD

Written by Wil Harris

November 28, 2005 | 18:15

Tags: #charlie-demerjian #inquirer #opteron #profits #server #switch

Companies: #amd #dell #hp #intel #sun

A fantastic opinion piece on the Inquirer today outlines why Dell will eventually have to switch to AMD.

In it, the strategies used by big server companies - such as Dell, HP and Sun - are disected in a manner that average punters like us can understand. The practice of slashing prices to compete with superior hardware or quotes from other companies is pretty common, and Charlie Demerjian at the Inq suggests that the financial penalty that Dell are taking from not having AMD hardware is starting to hurt the firm in a big way.

Here's a snippet:

"Now, if there are other things at play, you can get loss leaders like the 2 for 1 sales at a supermarket on Coke. If Dell thinks it will let HP in to a big account, they might suck down a few dollars profit, or even swing things to a loss to fend off a serious effort by the other side. HP will do the same to Dell, and that is how the game is played...

So, how does HP compete? Easy, with AMD. If they are bidding against Dell, they lead off with Opterons and point out price/performance versus just price. AMD wins this one handily in the 4P space, and by large margins in 2P, but not as decisively. So, this means that Dell has to discount a lot, sometimes up to 50% to be competitive. (As a hint to all Dell buyers, get an HP Opteron bid and show it to your sales person even if you have no intention of buying HP, it will lower your bill)."

Could Dell eventually end the speculation and announce some AMD hardware? It seems that the next quarter could seal the deal for Dell either way. Let us know what you think in the forums.
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