Feeds

Dell takes care of Wall Street, not customers with AMD move

Opteron distraction

Intelligent flash storage arrays

Analysis Dell's decision yesterday to start shipping an AMD-based server sent a strong signal that investors and not customers come first for the company's current management team.

At face value, we'll grant you that such a statement seems odd. After all, it's the customers and not investors that will be buying Dell's new four-chip Opteron server at year's end.

Executives, however, really concerned about placating customers would have shipped Opteron-based systems long ago. Dell's server sales, which always grew at double-digit rates, dropped to 3 per cent growth during its first quarter when compared to the same period last year. When compared to Dell's fourth quarter, server sales actually fell 7 per cent.

Meanwhile, sales of Opteron chips have surged with AMD reporting triple-digit growth year-over-year. As the most successful Opteron server vendor, HP benefitted most from the strong performing chip. Another Dell rival Sun Microsystems has carved out close to a $500m a year Opteron server business. Even an Opteron-focused newbie like Rackable Systems that competes in Dell's low-cost core has seen its share price jump from $12 to $35 over the last year on the back of strong sales to the likes of Microsoft, Yahoo and Amazon.

It seems impossible to believe that Dell could claim it didn't hear demand for Opteron systems from its customers during the year, but that's what the company insisted.

Rather than picking up Opteron as it should have two years ago, Dell stuck with Intel during one of its darkest times. Dell charged that Intel's impressive product roadmap was the reason for this loyalty, but we've seen Intel rework this pristine roadmap again and again over the past two years, and there's still more work to be done before Intel has an architecture that can match AMD's from one-way boxes to eight-way boxes.

Dell, in fact, confirms that last point by choosing Opteron for higher-end servers.

That said, Intel does have a more impressive overall processor lineup coming out later this year. So why on earth, after missing the Opteron boat, would Dell decide to "listen to its customers" now, when it really doesn't have to?

There's no question that one of the main drivers behind the timing of Dell's Opteron decision was its flagging financial fortunes.

Leading up to yesterday's first quarter results, Dell had warned investors that its revenue figures would disappoint. That warning coupled with plummeting financial markets have crushed Dell's share price in recent weeks. Dell knew that it would make matters worse yesterday by showing the actual results to investors and announcing a broad plan to reinvigorate its business.

What better way to distract investors than by playing the AMD card?

Choosing a cloud hosting partner with confidence

More from The Register

next story
'Kim Kardashian snaps naked selfies with a BLACKBERRY'. *Twitterati gasps*
More alleged private, nude celeb pics appear online
Wanna keep your data for 1,000 YEARS? No? Hard luck, HDS wants you to anyway
Combine Blu-ray and M-DISC and you get this monster
US boffins demo 'twisted radio' mux
OAM takes wireless signals to 32 Gbps
Google+ GOING, GOING ... ? Newbie Gmailers no longer forced into mandatory ID slurp
Mountain View distances itself from lame 'network thingy'
EMC, HP blockbuster 'merger' shocker comes a cropper
Stand down, FTC... you can put your feet up for a bit
Apple flops out 2FA for iCloud in bid to stop future nude selfie leaks
Millions of 4chan users howl with laughter as Cupertino slams stable door
Students playing with impressive racks? Yes, it's cluster comp time
The most comprehensive coverage the world has ever seen. Ever
Run little spreadsheet, run! IBM's Watson is coming to gobble you up
Big Blue's big super's big appetite for big data in big clouds for big analytics
prev story

Whitepapers

Providing a secure and efficient Helpdesk
A single remote control platform for user support is be key to providing an efficient helpdesk. Retain full control over the way in which screen and keystroke data is transmitted.
A strategic approach to identity relationship management
ForgeRock commissioned Forrester to evaluate companies’ IAM practices and requirements when it comes to customer-facing scenarios versus employee-facing ones.
Saudi Petroleum chooses Tegile storage solution
A storage solution that addresses company growth and performance for business-critical applications of caseware archive and search along with other key operational systems.
WIN a very cool portable ZX Spectrum
Win a one-off portable Spectrum built by legendary hardware hacker Ben Heck
The next step in data security
With recent increased privacy concerns and computers becoming more powerful, the chance of hackers being able to crack smaller-sized RSA keys increases.