My esteemed colleague Tim says he admires the "guts and determination" of AMD (NYSE:AMD) employees and concedes the company's technical leadership over Intel (NASDAQ:INTC). But he doesn't think that's enough to win the microprocessor war, nor even to attract sane investors.

No guts, no glory
So, AMD finally got into Dell (NASDAQ:DELL) servers and eventually even consumer-level machines, after being locked out of that company for years. Tim doesn't see the big deal there, since Dell has problems of its own.

Let me put it this way: If you ran a widget-making company and Wal-Mart (NYSE:WMT) agreed to distribute those widgets nationwide, would you then give the retailing market leader the cold shoulder just because its sales had been disappointing for a couple of quarters, and Target (NYSE:TGT) was putting pressure on Wal-Mart's prices? I don't think so. Dell is the Wal-Mart of computer systems, and AMD will benefit greatly from this new and quite massive distribution channel.

And what of Apple (NASDAQ:AAPL), you say? Intel has that exclusive contract with no price war there. Hold on one second. Those Core 2 Duo processors inside Apple boxes are the same as the ones you'll find inside Dell or Gateway (NYSE:GTW) machines. Do you really think a notorious negotiator like Steve Jobs would pay more than fair market price for his company's components? Those processors are part of the same price war as everything else.

Ah, yes, the price war. Intel may have deeper coffers filled with gold, and its cash-generating prowess is indeed impressive. It stands to reason, then, that the company should prevail in a drawn-out war of attrition where nobody except the end-user customer stands to gain. Riddle me this:

TTM Operating
Cash Flow*

Mar. '05

Jul. '05

Oct. '05

Dec. '05

Mar. '06

Jul. '06

AMD

$1.1

$1.1

$1.3

$1.5

$1.8

$1.8

Intel

$15.1

$14.0

$15.2

$14.8

$13.2

$11.7
Data from Capital IQ, a division of Standard & Poor's.
*Figures in billions.

You tell me which company is suffering the most from this war. AMD is doing all the right things and reinvesting in its future, while Intel is slashing jobs and running around like a beheaded chicken. I rest my case.

Intel, Dell, and Wal-Mart are Motley Fool Inside Value recommendations. (Dell is also a Motley Fool Stock Advisor pick.) Try a30-day free trialto Inside Value to find more of the deep values Philip Durell and his merry Fools look for 24/7.

Think you're done with the Duel? You're not! Go back and read the other three arguments, vote for a winner , and share your opinion at Motley Fool CAPS .

Fool contributor Anders Bylund holds no position in any of the companies discussed here. You can check out Anders' holdings if you like. Foolish disclosure is the Next Big Thing.