How MS will end the Dell - Intel love-in

Forget Wintel. It's all about DeWinteron

Regardless of these detractors, Dell will still cave and start shipping dual-core Opteron boxes as soon as they are available because its reputation depends on it.

In the past, Dell has prided itself on being able to ship new, faster chips ahead of the competition. When Intel rolls out a new part, Dell is often the first vendor to offer it in servers. This is a competitive advantage for Dell. Historically, AMD hasn't been able to disrupt this tradition because its products were only comparable to Intel's - not overwhelmingly better.

Dell, however, will not be able to afford being the last major server vendor to the dual-core market. There's no way Dell would invite every single one of its customers to take a peek at what IBM, HP and Sun have to offer for a six month period, especially in the key Windows software market. One can only imagine how a Dell salesperson would respond to a two-way ProLiant with four processor cores without a similar Opteron box in Dell's arsenal. Dell would look like a stubborn laggard that does what Intel tells it to do without question. (It's already hard to question that Dell isn't subject to Intel directives given that Dell has sold about 800 Itanium servers - ever. "We only ship what customers demand." Hardly. Dell only ships what Intel demands. Might be time to rethink that strategy.)

Besides the utter embarrassment of being last to market, Dell's rejection of dual-core Opterons would hurt its partner of all partners - Microsoft.

Microsoft has taken a leadership role in multicore processor pricing to try and help it gain ground against Oracle, IBM and Linux and to warm customers' hearts.

"It does look like Oracle and IBM are right in the cross hairs with Microsoft's announcement," said RedMonk's Governor.

How about another perspective?

"It's aimed at Oracle and IBM to a lesser extent," said DiDio.

Microsoft is going to trumpet its per processor licensing advantage over the likes of IBM, Oracle, BEA and Veritas until it can trumpet no more. The folks in Redmond still make most of their money off of Windows and Office. Microsoft has less to sacrifice than an Oracle or an IBM by taking a per processor hit on its enterprise software stack. It also has billions in the bank that allow it the freedom to fund an innovative, risky pricing model ahead of competitors.

In addition, Microsoft's quick action on the multicore processor front is surprising customers who didn't expect to see such kindness from a typically tight-fisted vendor.

"This seems like an unlikely play from a company that never really allows itself to get the short end of any stick," said Arturo Castellanos, an IT consultant for non-profits in Austin. "It doesn't seem to fit the usual m.o. of strict licensing that has been part of Microsoft's strategy in the past. It's really pretty encouraging."

Small and medium-sized businesses are exactly the types of customers Microsoft can woo effectively with this new licensing plan. These customers certainly want the most bang for their buck, and getting two processors for the price of one has to look pretty good. Larger customers have much more complex data centers and complex licensing arrangements that would tend to dilute the gains of just moving to dual-core chips.

"This is a big part of Microsoft's overall, long-term strategy - to regain customer trust," DiDio said.

The SMB market happens to be one of the key segments that Microsoft and Dell target together. Microsoft will want Dell onboard with the dual-core Opteron processor from day one to make the most of its goodwill effort.

Bill who?

In the end, Microsoft may have nothing to do with Dell's acceptance of Opteron.

Dell executives have seemed eager to stir up Opteron rumors of late. It may well be the case that the company had decided internally to go the Opteron route awhile ago. At the very least, the Dell Brass wants the world at large to think it made the Opteron decision independently. The chip is a strong performer that has captured customers' attention, and AMD seems to have its act together a bit better than Intel on the 64-bit front.

Dell could end up giving AMD a test run with single core Opterons when 64-bit Windows Server 2003 finally ships for the chip. If Dell hasn't caved in by then, it will surely fall when the dual-core Opteron arrives.

Should Dell counter our stunning logic and resist Opteron at that time, then the conspiracy theories about Intel doing all it can - wink, wink - to keep Dell away from AMD will really fly. Dell is a bottom line kind of company, and Microsoft is providing the bottom line reasons for Dell to pick up AMD's kit. ®

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