DELL will spit at INTEL and kneel to AMD soon

DELL dude is good at bad mouthing others, the arrogant high school diploma holder who made billions with screw drivers insulted AMD, insulted Apple, and he insulted SUN and others. The insult on AMD has won him quite some favours from INTEL. But the dude is in a time of hurt.

Look at DELL's latest quarterly report, and look for the segment information, 52.6% of DELL's revenue ($7.324 billion) came from corporate accounts in Americas, however, if you look at the profits, 68.3% of the profit ($817 million) came from corporate accounts in Americas. In comparision, only 13.6% of DELL's revenue came from US consumer market and that only generated $80 million profit (6.68%).

You do see a slight decline of DELL's US consumer business from 2004 to 2005. Clearly, AMD's gain in consumer market had a tiny impact on DELL. AMD has grabbed substantial market share in high end server business, but AMD has not entered corporate PC business in a big way. In other words, DELL has not felt AMD's impact on its core profit engine.

But that's going to change. As corporations increasingly adopting the superior AMD64 platforms on the server front, it becomes more and more obvious that they should adopt the same architecture for desktop PCes. After all, just as Xeons are Pentium 4s, Opterons and Athlon 64s are almost identical chips, with the same architecture, same instruction set, the same performance and performance per watt advanatges. In fact, the socket 939 Opteron 1xx are the same as Athlon 64s.

AMD claimed in their 4Q05 conference call that the quarter's success was partly due to penetration into some corporate desktop business. As I look at www.hp.com, I saw more AMD business PC solutions, it even has this Athlon 64 blade PC weighing only 2 lbs. HP is the #1 x86 server vendor with almost 3x the x86 server revenue as DELL, it should be very convenient for HP to sell AMD64 desktops and notebooks along with Opteron servers to the same corporate customers for exactly the same reasons -- better performance, lower power consumption, AMD64 compatibility.

It really doesn't make sense for a corporation to choose powerful and cool Opteron 64 servers but uses slow and hot Pentium 4 desktops and 32 bit Pentium M or Core Duo notebooks. It is especially irrational for companies to buy 32 bit centrino and Core Duo notebooks, which will be obsolete in just a few months.

AMD promised that 2006 will be the year that it enters the corporate PC business in a major way. AMD is going to do it with HP Compaq, by bundling Opterons and Athlon 64s in deals.

Now, DELL will have to do something sooner or later. But anything done after Q2 will be too late.

AMD does not need DELL.