Dell CEO is 'open' to using AMD chips

Jim Finkle

BOSTON: Dell Inc.'s Chief Executive Kevin Rollins said on Thursday that he is open to selling computers that run on microprocessors from Advanced Micro Devices Inc.

Dell, the world's biggest manufacturer of personal computers, currently uses microprocessors from No. 1 chipmaker Intel Corp. as the brains of its machines and Dell is Intel's biggest customer.

"We're always open" to making changes, Rollins said. "We want the very best technology for our customers."

Rollins made the comment to reporters after speaking at a lunch sponsored by the Boston College Chief Executives' Club.

Industry analysts have long speculated that Dell might start offering customers the option of buying PCs that run on AMD microprocessors.

Such a move might allow Dell to offer less expensive computers without hurting its financial results. Dell had slower-than-forecast revenue growth in 2005 as it lowered prices on entry-level computers.

"If ever there was a time when Dell needed AMD, this is probably it," said Nathan Brookwood, head of market research firm Insight 64.

AMD's chips generally process information more efficiently than similar products from Intel, Brookwood said.

"They also have advantages in terms of energy consumption and the thermal characteristics of their chips," he added.

Dell Chairman Michael Dell last week added fuel to recent speculation that his company might start using AMD chips during an appearance at the Consumer Electronics Show in Las Vegas. Cnet news said Michael Dell told reporters adding AMD processors to the product line "is a distinct possibility."

Signing a deal with Dell would be a feather in the cap for AMD, the No. 2 maker of computer microprocessors. The much smaller rival has been eating away at Intel's share in the market for microprocessors that run laptop computers and server computers.

AMD microprocessors for gaming machines generally win higher ratings from gaming enthusiasts those from Intel. Dell is trying to boost sales of high-end multimedia personal computers designed for playing video games.

"I've long believed that Dell will ultimately have to do something with AMD if it doesn't want to lose some key server business," Brookwood said. "That may also be an imperative in the gaming business."

Investors already have high expectations for AMD.

AMD shares trade for about 43 times the average analyst forecast for the coming year's earnings per share. Intel is trading at a future price-earnings ratio of 16.

Many of Dell's rivals, including Hewlett-Packard Co. and Gateway Inc. have models that use microprocessors from AMD and Intel in their product lines. Apple Computer Inc. this week announced its first computer models that use chips from Intel.

(Additional reporting by Scott Hillis and Phillip Gollner)