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AMD 'penetrates' Dell - again

Fading rumour fire restoked by analyst

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Dell is once again being touted as a potential supplier of AMD CPUs, this time in a research note provided by US investment advisor Susquehanna Financial Group.

"Based on our channel checks, AMD has finally been able to penetrate Dell with its Opteron processors targeting the server market," SFG's latest Semiconductor Devices report claims.

"While Dell has always been an Intel exclusive OEM, our checks indicate that Dell is currently designing two dual-processor servers based on AMD's Opteron processors. This would be the first time that AMD has been able to get in any of Dell's systems and could open the door for AMD to expand its processor line-up into future Dell desktop PCs and notebooks, in our view."

Of course it could, but it seems unlikely, no matter how much the AMD fanboys might wish it. There have been 'Dell is about to use AMD chips' rumours aplenty throughout the past five years and beyond, none of which have come to fruition.

As the one major PC supplier that has yet to offer AMD-based product, Dell finds itself courted by both AMD and Intel: the latter to ensure its exclusivity is maintained, the former to really put one over on its arch-rival. This naturally suits Dell very well, since it keeps it in the driving seat of each relationship. Where it will steer them both, we wouldn't dare to guess.

Equally, we've no doubt that Dell is designing an Opteron-based system. Heck, with so many off-the-shelf components available, it wouldn't exactly be hard to do. But to view such experimentation as a sign of a shift to AMD - particularly without any corresponding evidence of a big swing in the market in favour of Opteron-based kit - is to read too much into the signs.

It's a bit like saying Apple is going shift the Mac to x86, just because its buying Windows PCs to test iTunes on.

SFG also notes that Sun is readying further Opteron-based servers for introduction in Q4. "Additionally, Sun is slated to port its 64-bit Unix software onto AMD's Opteron architecture, which should elevate AMD in the enterprise market against Intel, in our view," SFG says. "Sun's 64-bit Unix software is widely used in the worldwide enterprise server market, which is forecast to grow more than three per cent compounded annually from $50bn in 2003 to $58.5bn in 2008.

"We believe that the ability for AMD to run Sun's software could open up many more opportunities for the company in the coming quarters given the size of the enterprise server market and AMD's limited market share in the enterprise space."

Maybe then Dell will take a more serious look at Opteron, but while AMD's market share remains "limited", as SFG puts it, we're doubtful that the benefits for Dell would outweigh the loss of its current bargaining position with Intel. ®

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