* Dell confirms it will use AMD chips in its high-end servers range
Dell finally knuckled under and said it would offer servers based on the AMD Opteron Dual Core processors by the end of this year.
The decision, by the only computer manufacturer not using AMD processors, is a good one and will help Dell re-establish market share, analysts say.
“We believe Dell’s gains are primarily going to come from taking share from IBM, HP, and other competitors already using AMD processors, and not from a major shift away from Intel processors,” says Kevin Vassily, equity analyst at Susquehanna Research.
Dell has said that it will put AMD processors in its high-end servers only, where it has highest margins. Vassily says that Dell’s server and networking business accounted for only 9% of its revenue in the quarter ending in April. Although Dell has gained market share in the past year, it has lost business to HP and IBM, whose AMD-based servers have performance and efficiency advantages over Intel processor-based servers.
Dell has said there is no way it is moving away from Intel. The company, like HP, IBM and MPC recently introduced servers that use the Intel Woodcrest processor.
The Texas vendor, Vassily claims, accounts for 26% of its revenue from notebook computers and 36% from desktop systems.
Dell, which reported that its profit fell by 18% over a year earlier, is in need of help to grow its market share in server systems. HP, whose share price has climbed more than 50%, is proving to be a strong competitor.
“We didn’t recognize how competitive the market was going to be [last year],” said Michael Dell, a few days before the company announced its financial results.
Adding AMD processors to its line of servers is clearly a way Dell can improve its margins and regain some of the market it has lost to HP.
