For the first time ever, Dell is preparing to sell laptops and desktop computers based on Advanced Micro Devices(AMD) processors, using platforms supplied by Nvidia, according to industry analysts.
In line with recent investor speculation, Pacific Crestâ€™s Michael McConnell said, we have confirmed that Dell plans to broaden its supplier relationship with AMD in the second half of 2006.
He says Dell is already preparing desktop computers based around AMD's Athlon-64 processor, which are targeted towards the consumer markets. These systems are expected to ship in the third fiscal quarter, which ends October.
Notebook computers are also in development and will be based around AMD's Turion-64 mobile processors. They are expected to ship in the first quarter of 2007, he said. Official details should be announced at the Dell's August 17th earnings conference call, or during its analysts day in September, McConnell said.
The worlds largest computer manufacturer has targeted an initial ramp of 1.2 million AMD-based desktop and server units for its third quarter. This, McConnell elaborates, represents 16 to 17 percent of the company's projected desktop and server units in aggregate.
On top of this, Santa Clara based Nvidia Corp. has captured the platform design win with its nForce chipset for the new AMD models. Platforms designs serve as the foundation of the computer, connecting the CPU, memory, and other parts together.
The news is welcome to Nvidia, whose long time rival ATI Technologies was just acquired by AMD last Monday. Some speculated the acquisition would put color=blue>excess strain on Nvidia as AMD and ATI may have formed an exclusive relationship.
This proves not to be the case. McConnell expects Nvidia to ship an incremental 1.2 million nForce chipsets to Dell in the October fiscal third quarter and 1.4 million in the January quarter, which adds $30 million and $35 million to our prior revenue estimates of $744 million and $801 million, respectively.
This comes as bad news for Intel, however, who at one point served as Dell's sole supplier of platform chips and processors. Recently, Dell moved away from Intel in the lucrative server market, opting to use AMD's Opteron chips instead. With what some argue as the industry's leading performance-per-watt processor, AMD has been able to gain nearly 33 percent of all server market revenue.
Last Thursday, Intel released a new version of its desktop processor, the Core 2 Duo, however McConnell feels with Dell scaling back its dependence on Intel, the chip-supplier may be adversely affected.
With initial Core 2 Duo unit volumes unlikely to exceed 1.5 million units in Q3 and likely allocated to top customers Dell and Hewlett-Packard, we do not believe that Intel's ramp will be able to fully offset company share loss at Dell in the near term, he writes. While we believe that Intel could offset the aforementioned share loss at Dell with gradual share gains in the channel or at other OEMs in late 2006 or early 2007, visibility remains low.
The analyst raised his earnings estimates on both AMD and Nvidia this morning, based on the findings.