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VARs: An AMD-Dell Deal Would Hurt Channel Margins

Solution providers on Thursday were lamenting the loss of margin that’s likely to come if Dell begins building systems based on chips from Advanced Micro Devices.

Over the past few weeks, speculation that Dell would begin using AMD chips in its systems has intensified. Dell President and CEO Kevin Rollins said in a Reuters report on Thursday that the Round Rock, Texas-based PC maker is open to using chips from Intel's chief rival. "We're always open" to making changes, Rollins reportedly said at a lunch sponsored by the Boston College Chief Executives' Club. "We want the very best technology for our customers."

On Tuesday, an industry analyst at Piper Jaffray suggested that Dell would be using AMD CPUs as early as the second half of this year. The analyst based his prediction on conversations with PC component suppliers, press reports of Asian manufacturers working on AMD designs for Dell and AMD's recent confirmation of chip shortages.

And a week earlier at the International Consumer Electronics Show in Las Vegas, Dell Chairman Michael Dell gave perhaps the strongest indication yet that he would consider using AMD processors. He said in a CES presentation that it was "a distinct possibility" that his company would consider using AMD processors. In the past, Dell has rebuffed the notion of using non-Intel processors.

Many solution providers have been using systems with AMD CPUs--particularly servers with AMD’s well-received dual-core parts--as a way to differentiate themselves from Dell, which deeply discounts its Intel-based systems. Last winter, CRN obtained a copy of an e-mail that Hewlett-Packard sent to its partners that offered discounts on its AMD servers and suggested the models would give partners a leg-up on Dell.

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