"In the second half of 2005, Dell's customers began to speak quite loudly about Opteron," he said.
Sources close to AMD, however, said a deal between Dell and AMD was not signed until this year.
Rollins said the decision was not related to the antitrust lawsuit AMD filed against Intel last year, in which AMD charged that Intel uses selective pricing schemes designed to provide incentives for its customers to exclude AMD from certain accounts, such as Dell. Intel has denied the charges, and Rollins said he does not expect Intel to penalize Dell for adopting AMD.
"Intel has been a great partner, and is going to stay a great partner. They are still going to (provide) the vast majority of our processors," Rollins said.
"We appreciate that Dell shows strong support for the bulk of our product offerings and belief in the strength of our road map," Intel spokesman Scott McLaughlin said in a statement. "The (four-way) niche has been a challenging one, but our next-generation Intel Xeon processor MP (Tulsa), shipping in the second half of 2006, will provide a competitive product."
Four-way, not two-way
It is interesting that Dell chose
four-processor servers, rather than two-processor servers, for its first Opteron
products, said Gordon Haff, an analyst at Illuminata. "If you're going to
introduce an alien product into your line, logically you might do it where your
highest volume is."
Although the four-way market only represents about 10 percent of the overall Intel-AMD server market, the servers represent about 30 percent of the overall revenue and are generally fairly profitable machines. AMD has also done particularly well in the segment. The company accounts for more than 40 percent of the Intel-AMD four-way boxes sold, according to various analyst figures.
In the overall Intel-AMD server market, AMD held a 26 percent market share in the first quarter, up from its fourth-quarter server market share of 16.4 percent, according to statistics from Mercury Research.
Several factors have helped AMD in this market, analysts said. The chips consume less power, Martin Kariithi at Technology Business Research said. It is also easier to build four-way servers out of Opteron chips because of their HyperTransport links, said Nathan Brookwood, an analyst at Insight 64.
"They were ready to do this several times," Brookwood said. Dell's recent market share declines, combined with the rise of AMD's market share may have toggled Dell over, he speculated.
Mercury Research analyst Dean McCarron said that a lack of AMD-based systems has hurt Dell in the server business, which, though a fairly small unit market, accounts for a disproportionate share of PC industry profits.
"They've been feeling a lot of competition from Opteron products from the other Tier 1 players," McCarron said, pointing specifically to IBM, HP and Sun.
"Presumably, it got to the point where Dell had to decide what mattered more--loyalty or trying to deal with the competition," he said.
"This is definitely a reality check for Dell," said Charles King, an analyst with Pund-IT. Now that the company has finally gotten on board with AMD, it will be interesting to see how the other server vendors adjust to the loss of an easy way to set themselves apart from Dell in the multiprocessor server market, he said.
While late to the market, McCarron said, Dell could still nab a piece of the Opteron server pie.
"This is a very competitive business," McCarron said. "The fact that they have lost market share doesn't mean that they can't regain it."
Meanwhile, Dell said in a filing with the Securities and Exchange Commission that it plans to sell up to US$1 billion short-term unsecured notes, known as commercial paper.
AMD's stock rose 12.6 percent in after-hours trading Thursday, adding US$3.95 to reach US$35.50. Dell's increased 4 percent, or 95 cents, to US$24.90. Intel shares fell 4.8 percent, or 91 cents, to US$17.74.
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