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Dell rejects idea of AMD defection

'Yes' turns to 'No'

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Dell will not pick up AMD as a second chip supplier despite increased chatter in recent months that such a move could be in the works.

Dell's CEO Kevin Rollins today told a group of financial analysts that Intel appears to have corrected numerous problems affecting its chip product over the past year. The close Dell partner has done enough to make up for these mistakes, so a possible deal with AMD is no longer in the works.

"That's looking like 'No'," Rollins said of an AMD deal, according to a Reuters report. "For a while it was looking like 'Yes'."

Speculation of an AMD partnership has surrounded Dell for years, primarily with regard to PC processors but more recently around server chips as well. Dell is the only Tier I server vendor to single source its chips from Intel.

Having both AMD and Intel processors looks to be a major advantage for the likes of HP, IBM and Sun Microsystems. AMD, for example, will come out with a dual-core Opteron processor by mid-year, while Intel will not have a comparable part until 2006. (AMD confirmed this timeline while showing a dual-core desktop chip today.)

Dual-core chips will give customers twice the performance of single core chips, and they will also deliver even more impressive software licensing gains. Microsoft has vowed to count dual-core processors as a single chip in its per processor licensing schemes, essentially giving customers two engines for the price of one. HP, IBM and Sun customers will be able to take advantage of this price cut, while Dell's customers won't.

Dell, however, doesn't seem concerned by these pricing issues or the fact that Opteron outperforms Xeon on numerous benchmarks.

"We believe that Intel has responded," Rollins said in the wire report. "That is now beginning to put customers more at ease that they don't need to make a shift (to AMD)."

By sticking with Intel only, Dell is able to maintain the supplier simplicity that made it famous. It doesn't have to worry about AMD slip-ups or change its ordering systems to deal with new parts. Its allegiance to Intel no doubt also comes with pricing and marketing perks.

But Dell's PC and server customers may be less impressed with this decision. Choice, performance and cost aren't king in Round Rock. How are those Itanium boxes selling? ®

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