The flirtation between Dell and AMD heated up in 2004 as Intel floundered with manufacturing missteps and road map detours. Dell executives were concerned about Intel’s future direction at times during the past year, Rollins said at the analyst meeting.
That concern showed in comments Rollins made to InfoWorld editors in November about Opteron. “I am sure there will come a time when we are going to use AMD,” Rollins said, going on to praise AMD’s products and to note that the company held a technology lead over Intel in some areas. Thus far, Dell has expressed more interest in AMD’s Opteron than in the Athlon 64 desktop chip.
But Intel has since stabilized its road map. After declaring in 2004 that it would be far more circumspect about revealing plans and launch dates for future products, Intel used its Intel Developer Forum in February to lift the curtain on a multitude of dual-core designs.
Rollins and Dell have taken notice and have eased back on AMD-friendly rhetoric.
“We believe that Intel acknowledged the challenges … and have been steadily improving their technological road map vis-à-vis AMD,” Rollins said at the Goldman Sachs Technology Investment Symposium 2005 in February. “So now it’s looking like ‘No.’ For a while it was looking like ‘Yes.’ ”
The backpedaling continued at the analyst meeting. Jeff Clarke, senior vice president of the product group at Dell, said the company has seen only “marginal increases” in demand for AMD’s chips from its customers. Michael Dell characterized interest in AMD’s chips as coming from “tire kickers,” not serious buyers.
It is very difficult to find an IT company that does not hold up customer feedback as the primary driving force behind product strategy decisions. But there are other factors at work in the complicated Dell-Intel-AMD love triangle.
Intel is widely believed to offer Dell significant discounts on processors and first crack at new Intel products in exchange for Dell’s fidelity. Rollins alluded to the cost issue at the analyst meeting, saying that the low costs related to its special relationship with Intel are definitely part of the company’s decision-making process.
An Intel spokeswoman declined to comment on the nature of pricing negotiations with Dell, but she said Intel works hard to compete for design wins against AMD on the merits of Intel’s technology.
There are other costs associated with the idea of a Dell Opteron server. At the analyst meeting, Rollins said, “For us to make a shift, we’d have to analyze costs not just from Intel.” Adopting AMD as a supplier would involve setting up new testing and development teams centered on AMD’s products, which would increase Dell’s operating costs, he said. Dell executives are obsessed with keeping operating costs as low as possible, given the low-margin nature of the PC business.
If operating costs rose, so might prices, which would disappoint at least one user.
“If Dell were to offer [Opteron], that’d be great. But if it’s going to cause the prices of other things I’m buying from Dell to go up, I’d rather have it stay the same,” said Chris Ruffieux, vice president of technology at Gannett Media Technologies.