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Advanced Micro Devices
In Reply To:
Athlon 64 and Opteron Prices

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By Roleplayer
November 26, 2002

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Beetred wrote: In order to sell into this price insensitive market Opteron needs a major OEM that would bundle server service with it. Where is that OEM now that we are 4 months away from launch? Or are you of the camp that this is all a super secret conspiracy, that some hidden x86-64 release of .Net server or Oracle 9 is about to be sprung on the unsuspecting world along with major OEM support?

Of bloody hell course this is a conspiracy of silence, and it has nothing to do with a hidden release. It is called monopoly power, and Intel wields it, and what is worse, IMO it is (and should be) legal.

The problem is that for every 3.06 gHz P4 sold, there are dozens of slower CPU's sold. But the profit on that one 3.06 box may equal the profit on dozens of computers with slower CPU's. Intel is trying as hard as they can to be able to make tens of millions of 3.06 gHz P4's; it's the best way to make more money. But until they do, Intel has more demand for that chip than supply.

So who is going to get those best, rarest, Intel CPU's? Dell leaps to mind, as Intel's most loyal lapdog. Dell's real benefit from the Intel relationship isn't preferred pricing, although that is nice. Dell's real benefit is dependability. If you're Joe Fortune 100 and you want to enter into a long term relationship with a big OEM and you know that there will be times when millions of dollars might depend on getting a few new (or replacement) machines in a hurry, dependability of supply becomes a huge issue. Dell's special relationship with Intel means that Dell has that issue locked up: if anybody wants/gets rare Intel chips, it's never before Dell. It might be at the same time as Dell, it might even be shipped on the same day the Dell CPU's get shipped, but never before.

Now suppose you are Dell, and suppose you've decided that you need to carry Opterons because otherwise you will be the most reliable provider of not very much in demand products out there. Do you announce it months in advance, when your steady supply from Intel might get hurt? I think not. Do you announce it the day it will happen? Maybe. My thought is that you announce it (to Intel if not the world) 1-2 weeks in advance, to give Intel a last ditch chance to woo you back with an impossibly good offer, and you don't announce it to the world until you have boxes ready to ship, just to placate Intel (and not Osbourne the rest of your line). Suppose you are IBM, or Gateway, or anybody else: all those arguments apply in spades, because you are already waiting on Dell to get all the chips you want.

So yeah, I think there are anywhere from 1-3 major OEM's ready to go with Opteron. Since I have no inside knowledge, I bet one of them is IBM, already an AMD partner in some manufacturing processes and already a demonstrator of DB2 running on Hammers. If there is more than one, I'd bet on Gateway, since they cannot possibly out-Dell Dell (there can only be one... Dell) next. Companies that don't depend so much on Intel (Apple, Sun) are also possibilities. But the big ones, the ones we're all hoping to hear, won't announce it until next quarter. And if you're looking for reasons for AMD's stock to rise so much the past few days, all it would take is a believable rumor that Dell or IBM or Gateway has already decided to support Opteron and will announce it publicly next quarter for all the reasons listed above. It doesn't mean it's true, but it sure would explain a lot of things.

That doesn't mean a stronger M$ tie-in isn't also happening. Time will tell.

Fool on,
Roleplayer


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