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Technology Stocks : Dell Technologies Inc. -- Ignore unavailable to you. Want to Upgrade?

To: TigerPaw who wrote (175223)	10/15/2005 12:22:19 AM
From: Meathead	Read Replies (2) \| Respond to of 176387

You are correct TigerPaw. I would bet the farm that if Dell did dip their toe into AMD waters, the first few systems brought to market would be through an OEM partner. But once AMD's foot is in the door, and they've gone through that first design cycle, the next one becomes easier and relationship solidifies. However, the biggest profits for Dell come on systems that they develop themselves so for a relationship like that to blossom to a max margin situation, Dell would want to control development of the higher end systems. That's where the R&D costs would ultimately have to be factored in. But is that the issue? Not in my opinion. The R&D costs associated with creating isolated design teams, labs, equipment, buildings etc. are mouse nuts in the grand scheme of things. I'd say it would increase the cost of their R&D budget by about 20% overall. Tack on another $100M yearly. They'd still be hovering around 1% of Revenue. Dell has a huge pile of money to spend and can spend whatever they want to develop a relationship with an alternate vendor so Intel better not piss them off. Everyone just assumes that Dell cowers under the mighty pressure of Intel cause Intel is superior, develops big time silicon and Dell is just a screw turnin integrator. Not so at all. Dell has more than one choice. What everyone needs to understand is that Dell is putting an equal amount, if not more pressure on Intel in this deal. Dell gets their way with Intel more often than not. Intel knows that Dell has the power to turn AMD into a SUPERSIZE competitor for them. They don't want that. Dell knows that if they do adopt AMD, they no longer have that threat to beat Intel into submission with. Intel knows that if Dell does stray, they just can't bite the biggest hand that feeds them by raising prices because that will further push Dell towards AMD and better sweetheart deals with them which means even less business for Intel. Ouch. Ouch. Ouch. It's a kung fu death grip. But honestly, who does everybody really think has the upper hand here? MEATHEAD