Dell Acquisition Start Of AMD Relationship, Says Analyst

SAN FRANCISCO — A prominent semiconductor industry analyst Wednesday (March 22) characterized Dell Inc.'s proposed acquisition of high-end PC supplier Alienware Corp. as a way for the computer giant to "back its way" into a relationship with Advanced Micro Devices Inc.

For months, rumors have persisted that Dell is seeking to develop servers based on AMD microprocessors, a move that would strike a blow to Intel Corp., which has been Dell's only provider of processors. But to date, Dell has yet to offer any product based on AMD processors.

Miami-based Alienware offers a wide range of systems featuring both Intel and AMD processors.

The deal, according to Doug Freedman, senior analyst at American Technology Research Inc., gives Dell access to a highly skilled design team — one that is familiar with AMD chips.

"I think this is the start of a relationship [between Dell and AMD]," Freedman said.By structuring the deal as to make Alienware a wholly owned subsidiary, Freedman said, Dell is also protecting its arrangement with Intel. While Dell has said in the past that it does not have exclusive agreements with Intel, Freedman said, not a great deal is known about the details of the companies' relationship.

"I've always felt like if Dell really wanted to have a relationship with AMD, it would," Freedman said, adding that one obstacle to such a relationship has been that AMD does not have the incremental capacity to handle all of Dell's business.

Freedman has been saying since at least January that American Technology Research expected Dell to announce a relationship with AMD as early as this month.

To put things in perspective, Freedman said that he and his colleagues estimate that Alienware currently ships about 85,000 systems per year — less than one half of one percent of the overall PC market. Alienware's systems, he said, are basically for people who used to build systems of their own but now can afford to buy them.

"It's very similar to the way that Dell got started," Freedman said of Alienware's business model.EE Times' David Roman contributed to this report.