Updated: Dell embraces AMD processors

SAN JOSE, Calif. — In a major shift in strategy, Dell Computer Corp. on Thursday (May 18) said that it would roll out new servers, based on microprocessors from Advanced Micro Devices Inc.

The disclosure, revealed in Dell’s first quarter results, indicated that the PC giant would introduce new servers based on AMD’s Opteron line of 64-bit processors by year’s end.

The news represents a boost for AMD (Sunnyvale, Calif.), but it is also a major blow for Intel Corp. (Santa Clara, Calif.). Since its inception, Dell has primarily used x86-based microprocessors from one vendor: Intel.

Dell will continue to use Intel’s processors for most of its PC lines, analysts said. In the financial release, the computer maker also said that it would “launch new ninth-generation servers featuring Intel's Woodcrest microprocessors.”

Later this year, Intel is expected to ship its new processor line, which is based on a next-generation architecture. Intel’s code-name for the server-based processor line is Woodcrest.

Despite the shift to AMD, Dell has been losing market share, especially on the server market. The company’s competitors have been grabbing market share by developing systems based on AMD’s successful Opteron line, according to analysts. In fact, Dell’s own sales force has been urging the company to adopt AMD’s Opteron chips in an effort to regain lost share.

Dell’s shift to AMD’s parts have been expected for months. In January, analyst Doug Freedman of American Technology Research Inc. indicated that Dell and AMD would make an announcement in March.

For weeks, however, Dell dismissed the rumors, saying that it had made no decision about using AMD’s parts.

Then, in March, Dell began to move towards AMD by acquiring high-end PC supplier Alienware Corp. Freedman characterized Dell’s proposed acquisition of Alienware as a way for the computer giant to "back its way" into a relationship with AMD. Alienware makes high-end PCs based on chips from both AMD and Intel.