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Analysis: Tables Turning As Dell Embraces AMD

For all the world it looked like a skirmish among server vendors. Dell, faced with three years of losing deals--and ground--to its rivals, finally caved in recently and said it would offer an AMD Opteron-based system.

But while Dell did indeed need to make the leap onto the AMD bandwagon just to keep pace with competitors such as Hewlett-Packard, IBM and Sun, the real drama, literally and figuratively, was going on under the hood.

Dell's diminishing server revenue is the price it has paid for its staunch support of Intel, even as AMD eclipsed the chip behemoth in dual-core performance, according to analysts. The sea change for Dell can be seen as fallout in the ongoing battle between AMD and Intel, with Intel finally making up ground--perhaps too little, too late for Dell--in the dual-core race.

In fact, Dell's recent decision to offer Opteron systems by year's end is yet another promising development for AMD, even as Dell's clout begins to recede. Forced to admit that its stand-by-Intel strategy was failing, Dell must now prove that it can bring all of its customers into the world of 64-bit, dual-core computing or continue losing business to the competition.

For the first quarter, HP posted 2.2 percent growth in server revenue, while Dell's dropped 1.1 percent over the same period, according to analysts. And the bulk of HP's growth has come from Opteron-based servers. Dell had, until just recently, steadfastly refused to offer Opteron-based 64-bit systems despite key performance and power-savings advantages over Intel's competing Xeon processors.

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