Last week, Dell gave into customer pressure and announced a bunch of servers housing chips made by AMD; unless you've been off-planet recently, you'll be aware that Dell has been Intel's best customer for years, and appeared to have set its heart against ever including a non-Intel processor in any of its systems.
Now it has. Joining the rest of the server vendors in manufacturing servers from two vendors' fabs was a long-awaited move - and one that undoubtedly caused much pain with Dell, although it was welcomed by analysts. "It's about damned time," said Charles King, an analyst at Pund-IT. "It has been clear that given the success of Opteron, business computing users want choice. They're not ready for a world where Intel is inside everything."
The company attributed the move to a need to reinvigorate its revenue and business model, following the backfiring of its plans to both increase profits and market share simultaneously. Instead, the plan opened the door to Dell's competitors such as HP and IBM, said company boss Kevin Rollins as he announced the move.
In the ultimate analysis, it's the product that counts. And while Dell's products have, by and large, given little for most IT managers to complain about - why would they buy so many of them? It's been intriguing both to watch and participate in the speculation over when Dell would finally give in to the blandishments of AMD - and potential customers for AMD products. It's those customers whom Dell has been unsuccessfully chasing with its Intel-only boxes, but the company has now finally put revenue ahead of religion.
It's not coincidental either that the move follows hot on the heels of two key developments. First off, sales of AMD's Opteron chip have rocketed in recent years, especially in bigger systems as a result of the smaller vendor' performance advantage over Intel in this area. So the fact that Dell chose to install Opteron in its four-way systems is hardly surprising.
Secondly, Dell posted some of the worst financial results in its history, with an 18 percent decline in its quarterly profit figures. In spite of that, the company's share price rose - coupled with the AMD announcement; the chipmaker's shares also rose, by the way.
Dell's incorporation of AMD product will hit Intel hard, especially from the point of view of marketing, as it highlights the relatively poor position Intel occupies with respect to AMD when it comes to multi-way servers. The corollary is that AMD profits from a marketing standpoint because the Opteron is to some degree validated by its acceptance by the world's top PC maker.
But what does it mean for us? With Dell finally in the AMD server market, there's going to be increasing downward price pressure, especially since Dell could if it chose, use its massive leverage to force big price cuts out of AMD. And a wider choice of products is no bad thing either.