Wednesday, December 07, 2005

Both AMD and DELL are draining INTEL

It is amusing to see DELL playing AMD card once again, and I am sure DELL has gotten some big discounts from INTEL again. After listening to DELL CFO Jim Schneider's talk at Lehman Brothers Global Technology Conference, I concluded that DELL actually has a lot of room to grow in desktop and notebook space, despite AMD eating INTEL's lunch. Why?

AMD's capacity is limited, and INTEL will have at least 65% of the CPU market next year. DELL now has only 18% of the PC market. With most favoured CPU pricing from INTEL and bargaining power on other components, DELL can eat a bigger portion of the INTEL pie by beating others like HP, Acer and whitebox INTEL makers.

For INTEL, the situation is like this

1) AMD is eating INTEL's lunch in server, desktop and mobile, there is no way to stop that, AMD has better technology period.

2) DELL keeps doing a bigger portion of the INTEL market, but at lower and lower ASPs paid to INTEL.

Jim said: "INTEL has been very competitive in terms of pricing with us".

Hector said: "DELL is a tough *** to get, but we will get the dude eventually".

Otellini said: "Keeping Dell happy is certainly one of our most important jobs".

Hurd said: Our INTEL PC business has a near zero margin...

Acer said: Our INTEL PC business has a negative margin....

Lenovo said: It is unfair for INTEL to give DELL better prices, we shall sue...

The universe is in perfect harmony....

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