AMD: We are growing with or without Dell

Posted by Wolfgang Gruener

Chicago (IL) - Lenovo, the Chinese company that took over IBM's PC business a little over a year ago, had big news this week. The company launched its first own-branded desktops and notebooks on a global basis. Part of that news was that AMD now has a foot in the door at two of the world's three largest PC makers. And, at least publicly, the company isn't too worried about getting the last one - Dell.

Lenovo has made its first steps on a global stage and succeeded in making big waves about its first non-IBM branded computers that leverage former distribution and sales channels of IBM. Considering the fact that Lenovo is currently ranked as the world's third largest PC manufacturer and the circumstance that the firm's debut was held in 10 countries was worth the comprehensive coverage the event received.

Not so visible, perhaps intentionally, was the fact that AMD was able to place its products in computer cases that previously had been unreachable for the company. IBM relied on Intel processors, as Bart Arnold, AMD's worldwide commercial product manager, confirmed to TG Daily. But since Lenovo has been using AMD processors in the Chinese market for some time now, it was a commonsense decision to include AMD in its most recent product launch as well.

For now, AMD's Lenovo presence is limited to the desktop J series. Lenovo offers AMD's processors - Athlon 64 3200+ and Sempron 3000+ models - in six out of nine models. While it remains to be seen just how successful these new computers - which apparently do not reach the high quality standards set by IBM - will be in markets that have been conquered by IBM, it is clear that AMD will gain market share through Lenovo's new computers. And AMD isn't shy communicating its extended partnership with Lenovo.

"We are flattered that they have decided to use us on a global basis," said Arnold. He believes that Lenovo chose the Athlon and Sempron processors because the processors offer some value additions, such as "lower cost," "lower heat" and "lower power consumption." Intel's presence is limited to two models that are available with Pentium 4 630 and 640 processors. However, Lenovo decided to go exclusively with Intel processors - Celeron-M and Pentium-M CPUs - in its new C series notebook line.

So, what about Dell? After being present in Hewlett-Packard computers and now in Lenovo/IBM devices, isn't Dell the next step for AMD? Not surprisingly, Arnold did not offer a clear answer to our carefully worded questions that danced around a topic that appears to be creating new rumors every day. However, he did say that "as of today there is no relationship with Dell." And while the top PC manufacturer currently controls 16.9% of the global PC market, according to iSuppli, it doesn't seem to bother Arnold too much that AMD isn't on Dell's list of suppliers.

"We highly value our relationships with our existing OEMs," he said. "We are always looking to grow our market share and have our growth goals in place. And those growth goals do not depend on having Dell as a customer," he said.

His statements are not quite enough to fuel yet another rumor, but clearly indicate that AMD will be focusing on building its existing customer base. AMD processors are more and more accepted among large end customers and Lenovo's decision to support its global launch with AMD processors will provide Athlon processors with additional credibility. It will be interesting to see, whether Lenovo will add more AMD products to its portfolio - such as mobile Turion processors for Lenovo-branded notebooks or IBM-branded Thinkpads. Arnold mentioned that he "cannot comment on unannounced products," but conceded that AMD would like to broaden its presence in Lenovo's product catalog.

According to Arnold, AMD is able to support its growth supply new customers through the recently opened Fab36 in Dresden, Germany. The new production facility "is not yet in full operation," he said, "and there is excess capacity."

It is pure speculation at this time where the relationship between Lenovo and AMD will be ending up, but it is clear that AMD is covering its bases and is confident that it can win market shares step by step. Lenovo could become an important cornerstone in that strategy: Every additional percentage point for AMD will increase the pressure on Dell.

On the other side, it is no secret that Intel won't be just watching AMD and give up more market share than it already has: The firm will be pre-viewing its next-generation microarchitecture (NGMA) at its Spring developer forum in the second week of March.

We expect Intel to come out in full force presenting its new mobile and desktop processors, which are rumored to be 20% faster than AMD's processors at any given clock speed and consume roughly 25% less power. The new desktop processors are due to hit the market in September of this year, just about when Microsoft is expected to launch its Windows Vista operating system. Perhaps coincidentally, Dell recently said that it will delay its annual analyst conference until September as well.