Dell:The AMD Partnership Is No Quick Fix (DELL)(HPQ)(IBM)(AMD)(INTC)

Dell is unveiling its new server line with AMD chips. Since its competitors in the server world include Hewlett-Packard and IBM, two companies that already use AMD chips in their products, Dell does not want to be alone as the only member of the group that relies strictly on Intel. And, why should they be left out?

The only problem is that when Dell made the decision to use AMD, its chips had performance metrics that were widely viewed a better than Intel’s. The larger chip company has introduced its Core 2 Dou line, and most observers believe that it has taken the performance edge back from AMD. And, Intel is introducing a new “quad core” product that is even more powerful.

While the AMD chips were popular when Dell first made its decision, recent quarterly financial announcements by Intel and AMD would seem to indicate that Intel is indeed gaining back share and pricing power.

There are probably few disadvantages to Dell offering AMD-based servers, but the advantages may have left the room along with AMD’s performance edge. If so, it is just more shuffling of deck chairs on the Titanic.

Douglas A. McIntyre can be reached at douglasamcintyre@247wallst.com. He does not own securities in companies that he writes about.