Dell Ships First Commercial Desktop With AMD ProcessorDell Ships First Commercial Desktop With AMD Processor

Dell, for the first time, is launching a commercial desktop PC powered by Advanced Micro Devices processors. It's a move that some analysts say may help the company, which is struggling to fend off aggressive competition, diversify its offerings and grab a bigger chunk of the business market.

The OptiPlex 740 supports AMD Athlon 64 X2 dual-core processors. This machine replaces its predecessor, the OptiPlex 620, which ran only Intel Pentium chips. The product announcements come as part of a sweeping list of product additions to the company's lineup of desktops, workstations, and servers. "AMD's reputation is around good performance for lower costs and there's no question that some of Dell's fiercest competitors have been able to undercut [Dell's] PC pricing by using AMD processors," says Joe Wilcox, an analyst with JupiterResearch. "Dell can only squeeze so much efficiency out of its operation, and other vendors have been catching up in terms of efficiency. Dell needs every advantage it can get. AMD, as alternative, is important for them."

Wilcox says it's not just key for Dell to be able to offers its customers a choice when it comes to processors. It's also important for the PC manufacturer to have more options that let it negotiate better prices for chips. "If you have more than one supplier, then competition can help you get better prices from one supplier compared to the other," he says.

Dell could use that kind of boost. The company has been going through some tough times. Once the industry powerhouse in the PC arena, it's struggling to compete with a surging Hewlett-Packard. Earlier this year, Dell reported that second-quarter sales rose 5% compared with the same period the year before. But quarter-to-quarter comparisons didn't look as good. Those numbers marked the second consecutive quarter-to-quarter decline in sales and profits.

Dell spokesmen have said they are hoping to reverse these slipping numbers by moving away from their Intel-only philosophy and spicing up their wares with AMD.

Loren Loverede, director of PC research at industry analyst firm IDC, says the addition of AMD chips to Dell's commercial desktop lineup is an effort to beef up their product line and begin to turn the ship around.

"It's pretty substantial acknowledgement that the lack of AMD processors in their lineup has put them at a competitive disadvantage," says Loverede. "Dell would have argued up until fairly recently that it was not a disadvantage. They said it gave them a streamlined product offering and they had plenty of variety. But Dell has not been growing at the same pace over the last year or so. They're looking for new ways to appeal to customers."

But Loverede also said this shouldn't be Dell's only step. "By itself, it certainly won't give them a boost," he says. "It's one factor that will help them. But they need to do more than just add AMD to reinvigorate their business."