Rollins: Dell unlikely to use AMD chips

Dell's CEO squashed growing speculation that his company would adopt AMD chips, after hinting earlier this year that Dell might be interested.

After months of public flirtation with Advanced Micro Devices, Dell's chief executive officer (CEO) has reversed course, telling financial analysts that Dell doesn't expect to offer servers or PCs based on AMD's chips in the near future.

The statement, for now, puts to rest speculation that Dell would end its reliance on a single company for processors. Since Kevin Rollins became Dell's CEO last July, he has steadily dropped hints that Dell might consider adding servers based on AMD's Opteron processor to its product lineup, which is currently based exclusively on Intel's Xeon and Itanium 2 processors.

Dell did consider AMD's technology during 2004, which was one of the more tumultuous years in Intel's recent history, Rollins said.

In the last 12 months, Intel was forced to copy AMD's philosophy of bringing 64-bit extensions to the x86 processor, scrap two future processor cores, and fix several manufacturing and design glitches across a wide variety of products.

"For a while, Intel, admittedly, had a technological slip, and AMD had made a step forward," Rollins said at Goldman Sachs Technology Investment Symposium 2005.

"We believe that Intel acknowledged the challenges ... and have been steadily improving their technological road map vis-a-vis AMD," Rollins said. "They are starting to put customers a bit more at ease that they don't have to make a switch. So now it's looking like 'No'. For a while it was looking like 'Yes'," he said.

Veteran industry watchers have seen the Dell/AMD relationship heat up and cool down for years.

Dell is thought to receive discounts on Intel chips as a result of its continuing loyalty to the world's largest chip maker. The company is also thought to occasionally toy with the possibility of using AMD's chips in order to keep Intel alert.

In a July interview last year, the week Rollins took over the CEO role, he declined to comment specifically on that issue.

He did say that his company's relationship with Intel made the company a lot of money."

In that same interview, Rollins also said, "We're not an Intel division. So we'll look at (AMD's) products, and as soon as customers like them and the market grows, and there's a clear trend, the technology is stable, the volume is there, yeah, we'd switch, or we'd add them. We don't have any objection against it."

Rollins intensified his statements about Opteron in November.

"My guess is we're going to want to add that product line at some point in the future," he said.

Plenty of industry analysts hadlost friendly bets on the probability of seeing a Dell server or PC with an AMD processor, editor-in-chief of the Microprocessor Report, Kevin Krewell, said.

His previous prediction that Dell and AMD would hook up by the end of last year clearly hasn't happened, he said.

AMD's chances with Dell were doomed by the numerous delays in the release of a 64-bit production version of Microsoft's Windows operating system, Krewell said.

That production version is expected to finally be released in the second quarter, about two years since the launch event for the Opteron server processor.

That delay gave Intel a chance to catch up to AMD's design with a 64-bit processor of its own, unveiled in February of last year at the Spring Intel Developer Forum, Krewell said.

Even though Opteron enjoyed an advantage on some benchmarks due to its strong performance on memory-intensive applications, Dell wass a Windows company and enjoyed the simplicity of having one processor supplier, he said.

One of the only 64-bit operating system choices for IT managers wishing to develop their own 64-bit applications has been Linux, which has been available in 64-bit versions for Opteron since 2003. Sun recently ported its Solaris operating system to AMD's technology.

Although many AMD backers likef to speculate that close relationships among Dell, Microsoft, and Intel led to the numerous delays, Krewell pointed out that Microsoft was notorious for releasing products far after their anticipated launch date.

AMD could take some consolation in the fact that Opteron chips are shipping from major server vendors such as HP, Sun and IBM, three companies that never would have given AMD a chance with its previous server chips, Krewell said.

And AMD would have another window of opportunity to demonstrate its capabilities when it released its first dual-core Opteron around the middle of this year, he said.

Intel's dual-core Xeon chip isn't expected until 2006.

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Tom Krazit

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