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Intel and The Dell-AMD Deal
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Not
surprisingly, Intel was unhappy with Dell’s decision to opt for AMD as
Dell had been using Intel chips for its servers, laptops, and desktop
PCs since it started selling PCs in 1985. Otellini, Intel’s CEO, said,
“While this is an incredibly disappointing announcement, it is not
totally surprising. We exist inside of an extremely competitive industry
and we have always had to work hard to win every piece of business.”[7]
Intel had been the market leader in microprocessors since 1991 despite
fierce competition from Samsung, Toshiba, and Texas Instruments in the
semiconductor industry. However, Intel now faced competition from AMD
and small competitors like VIA and Transmeta, which manufactured low
power processors for computers and portable equipment. |
Intel had also been facing problems on the earnings front.
For the first quarter of 2006, it reported earnings of US$ 5854 million, as
against the US$ 6,211 million recorded in the first quarter of 2005.
Experts were of the opinion that Intel had taken its market leader position for
granted and had failed to come up with innovative products such as AMD’s Opteron,
considered to be a leading technology in the industry. Analysts said that the
reason for Dell’s shift to AMD was a result of Intel’s loss of focus on
technological development.
To add to Intel’s woes, Microsoft announced that its new operating system (OS)
Vista[8]
, to be launched by 2007, would not need any hardware upgrade. Intel had
expected that the new OS would boost the demand of its computer chips.
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Continued... |
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[7]
Scott M. Fulton, III, “Intel CEO Otellini ‘incredibly disappointed’ by
Dell’s AMD decision Scott M. Fulton, III,” www.TGDaily.com, May 19, 2006.
[8]
Microsoft Windows Vista is the next generation of Microsoft Windows after
Windows XP. It proposed to integrate security as not an add-on feature but
an integral part of an operating system. It is scheduled to be launched in
January 2007. |
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