chic - DELL is unlikely to use AMD products for a couple of key reasons which are probably not obvious to someone not familiar with the company's history and business model.
First, DELL has developed great ROIC largely by maintaining a highly leveraged development effort - in other words, they get other people to do most of their engineering. The biggest contributor in this regard has been Intel. While this occasionally results in DELL being a little later to market than its competitors, that has not hurt them much, since it also lets them see what product configurations are selling well, and targeting those segments. So while companies like CPQ which do a lot of engineering may get a small window of opportunity, they pay a lot for that window. DELL, on the other hand, can put its resources into "usability" engineering (making the products easy to expand and service for example) at a much lower cost.
This has enabled DELL to develop highly competitive products with an R&D model approaching 1% of revenue. CPQ, by comparison, spends more than 8% of revenue on R&D. In the PC business, that incremental 7% is hard to recover, as CPQ's money-losing PC operations demonstrate.
Also, I question your statement: Intel clearly won't be competitive in the top end for at least the next 6 months
AMD will be lucky to have a 6 week advantage, let alone 6 months. Intel's partners are already working with 1 GHz PIII parts, and the PIII design will have at least a 10% advantage over the equivalent Athlon due to the cache design. So AMD has to have a 10% raw speed advantage to be competitive... You can buy an 866 MHz PIII today from DELL which for all but a few tasks, has performance equal to the 1 GHz Athlon (which are pretty hard to actually get BTW). Have you looked at the lead times on those systems from Best Buy and so on? Try and buy one... |
