Dell and AMD (was IBM White Paper on Opteron)

I think it's time to move this thread to a new subject heading. ;-)

Full disclosu I do not have, and never have had, any connection to
either Intel or AMD except as a satisfied customer. My CPU history:

When I graduated from 8088 PCs, my next two boxes were 20MHz 8086 "white
boxes" from Hi-Tech USA in Milpitas. I think these used AMD 8086s.
When the 486 came out, I started building my own PCs from scratch (sort
of personal white boxen . I bought an Intel 25MHz 486 when it first
became available. Later, when the Intel 486DX/66 was released, I bought
a grey-market copy for ~$600 and used it for years, overclocked to 80MHz
on a UMC mobo. I later upgraded to an AMD 486/100 and then an AMD
486/120 when they became cheap.

My next upgrade came when I was given an engineering sample of an AMD
K6/166. It worked great on an Abit mobo, as did a Cyrix/IBM CPU I
bought for comparison. I later upgraded to three AMD K6/233 systems
(personal white boxen) for my own mini-Beowulf. Don't ask. Later yet,
I upgraded two of these systems with AMD K6-2/400s, which is what I'm
using right now.

So I've used Intel, Cyrix, and AMD CPUs, and they all worked great. My
experience in the past 15 years leans toward AMD CPUs. I like them, and
recommend AMD to others with no hesitation. I also recommend Intel
CPUs, depending on the application - the P4 is great for streaming
video, less great for legacy apps. In most cases it doesn't matter;
either brand CPU will work fine. In fact, my now-ancient AMD K6-2/400s
work just fine.

I am seriously considering buying a brand-name or white box computer as
my next PC system. I no longer believe I can build better and cheaper
than is available from conventional outlets.
---------------------------------------

Now, the point of this long-winded exposition is that I am neither an
AMD bigot nor an Intel bigot. And I think that some of the regulars on
this NG are unfairly bashing Dell because it does not offer AMD-based
systems as a part of its product line. As I have recently posted, I
believe Dell is permitted to decide what business it wants to be in. I
don't want to close down McDonald's because it doesn't sell T-bone
steaks, even though I like them. ;-)

The possible reasons for Dell's decision make for interesting
speculation. What I don't understand is why they are _castigated_ for
that decision.

"Felger Carbon" wrote in message
et...
The possible reasons for Dell's decision make for interesting
speculation. What I don't understand is why they are _castigated_ for
that decision.

Because the well-founded suspicion is that they are being given unfair
advantages by Intel, which are not available to their competitors. The fact
that they don't offer AMD is really just one of the evidenciary pieces in
this puzzle, not really the main point. Beyond volume discounts it looks
like Dell receives preferential treatment from Intel on delivery schedules,
advertising money, and R&D (namely, they barely have to do any of their
own). The fact that AMD is offering all of these same sorts of advantages,
and Dell is still avoiding them, is highly suspicious.

Yousuf Khan

On Sat, 01 Nov 2003 11:51:22 GMT, "Felger Carbon"
wrote:

snip

Now, the point of this long-winded exposition is that I am neither an
AMD bigot nor an Intel bigot. And I think that some of the regulars on
this NG are unfairly bashing Dell because it does not offer AMD-based
systems as a part of its product line. As I have recently posted, I
believe Dell is permitted to decide what business it wants to be in. I
don't want to close down McDonald's because it doesn't sell T-bone
steaks, even though I like them. ;-)

The McDonald's reference was my answer to your seeming to equate
market success with product quality. I don't want to shut anybody
down. I like free speech, free markets, free discussions, freedom for
people to do whatever they like as long as it doesn't hurt other
people.

The possible reasons for Dell's decision make for interesting
speculation. What I don't understand is why they are _castigated_ for
that decision.

The world may very well be better off because of Michael Dell's
ruthlessness. I try (obviously with very little success) to keep from
getting entangled in moralizing discussions about business. The world
may be better off because of Bill Gates and Steve Ballmer, but I say
something negative about them every chance I get. Who knows why.
It's barely one step up from sports talk radio.

It _is_ one step up, though, and reading how other people feel about
these things provides me with perspective I might not otherwise get.

If c.s.i.p.h.c degenerated into comp.os.linux.advocacy, I'd stop
reading and posting.

As to buying a computer, the only way to know for sure what's inside
it is to buy the parts and build it yourself or to have someone you
trust do it for you. Otherwise, you are buying a product with less
disclosure than the package of crackers you buy at a convenience
store.

When you build from parts, you have all the manuals from the actual
manufacturers, a BIOS that hasn't been dumbed down, access to the
motherboard manufacturer's website for BIOS upgrades, access to the
peripheral cards websites for driver upgrades, and the right to
replace whatever you want whenever you want.

Why anybody who knew one end of a screwdriver from the other would
give all that up to have the pleasure of doing business with Dell or
HP is a mystery to me. Okay, so it might help if you knew just a
little more than that, but there is nothing you can't find out right
on the web.

To shift the subject, but still apropos of your post, *most* of us
have been jerked around wildly one way or another by powerful market
forces in a fast changing business. Maybe some of the posters here
think they understand those forces, and maybe some people think I
think I understand those forces. I don't.

I briefly worked for some idiots who were fond of saying "perception
is reality". Perception isn't reality, but it's a *very* big piece of
the puzzle if you're dealing with markets.

I live in an area where alot of people got buried under the rubble of
DEC. How many people will tell you they *knew* all along? Maybe
people should have taken a harder look at Ken Olsen earlier in the
game. Certainly his board of directors should have.

Dell is a bottom feeder. He lets other people take the risks,
contributes nothing of value, and has admirers calling him a genius.

If that's the future of this business, I'd like to know it before it
happens, rather than after.

RM

or some propellor-head at Dell has sat down with a calculator & correlated an
estimate of how many boxen are delivered per quarter with their heatsinks
detached as par courier liberties of handling ;-)

"Robert Myers" wrote in message
...

Dell is a bottom feeder. He lets other people take the risks,
contributes nothing of value, and has admirers calling him a genius.


And you, and the others bashing Dell, are the *true* unsung business
geniuses, right?

As with financial analysts and brokers - if you are so knowledgable, what
are you doing here?

Sheesh - what a maroon...

Regards,
Dean


RM

"Yousuf Khan" wrote in
message
le.rogers.com...
"Felger Carbon" wrote in message
et...
The possible reasons for Dell's decision make for interesting
speculation. What I don't understand is why they are _castigated_
for
that decision.

Because the well-founded suspicion is that they are being given unfair
advantages by Intel, which are not available to their competitors.

Unfair?? Do you mean illegal, or what? "Advantages not available to
their competitors"? Shouldn't this be a criticism of Dell's
supplier(s), not of Dell?

Beyond volume discounts it looks like Dell receives
preferential treatment from Intel on delivery schedules,
advertising money, and R&D (namely, they barely have
to do any of their own).

Dell spends 1.5% of its gross on R&D, IIRC. Have you taken a look at
Dell's gross sales/year lately?

Why are you not unhappy that Dell does not also support Via and
Transmeta CPUs? That Apple does not support AMD?

If Dell did establish a second product line using AMD CPUs, the customer
experience would be improved how? I've been under the impression that
disks and video boards provide more differentiation these days than
CPUs.

Well, at least you haven't, IIRC, accused Dell of illegal monopoly
behavior. It's hard to be a monopoly when you have only a 20% market
share and your closest competitor has an almost identical market share.

The fact that AMD is offering all of these same sorts of
advantages, and Dell is still avoiding them, is highly suspicious.

So Intel and AMD are equally guilty of offering illegal incentives?
What??

Show me who has broken the law, Yousuf. And just what law is that?

"Felger Carbon" wrote in message
k.net...

Show me who has broken the law, Yousuf. And just what law is that?


Felger,

As I said before - the argument is purely emotional, not rational. What
sets me off is when someone makes a conjecture, then builds an entire
argument based upon that conjecture, and when the conclusion is questioned
he/she starts making more unfounded assertions simply to support the first.
The *real* problem is that schools apparently do not teach critical thinking
skills anymore. People seem to think that if you say something enough
times, or if it 'feels right', it becomes fact without any other supporting
evidence...

Regards,
Dean

"Robert Myers" wrote in message
...

Dell... lets other people take the risks, contributes
nothing of value, and has admirers calling him a genius.

That's three comments. Let's take them one at a time:

"lets other people take the risks". This is bad?? You _like_ to be a
pioneer with arrows stuck in your back?

"contributes nothing of value". Dell holds its supplier's feet to the
fire over quality because it's expensive to support failed equipment.
Dell does _not_ buy from the lowest bidder unless the quality is there.
The fact that in a fairly recent survey of users Dell came out near the
top and HPaq near the bottom is no accident. Providing a timely, low
cost, good quality product contributes nothing of value??

(Yes, Keith, I know you prefer IBM portables. But IBM portables are
very expensive. Dell's portables are as good as any comparably priced
product.)

"has admirers calling him a genius." You are dead right. And
marketingwise, Mike Dell _is_ a genius. The low prices Dell offers
(while making a profit, unlike competitor HPaq) are based on Dell's
innovative business model. For readers unfamiliar with this business
model, let me explain:

HPaq sells through distributors. This means a price markup at the
distributor. Dell does not have this expense, since it sells direct to
the customer, mostly by taking advantage of the internet.

Since HPaq has inventory sitting at its distributors, it costs HPaq a
lot of money to increase sales since it first has to increase inventory,
and that costs money. In addition, HPaq has to pay its suppliers long
before money from the end customer wends its way back up from the
distributor. HPaq has (necessarily) an enormous investment in
inventory, Dell almost none - two days' worth?? More important, Dell
collects from its customers in an average of 8 days, and pays its
suppliers in the usual time - 30 to 60 days, same as HPaq. This means
when Dell increases sales, it actually _increases_ Dell's cash flow.
That, folks, is genius!

Why doesn't HPaq switch to Dell's business model? It can't, for these
reasons:

1. The day HPaq stops selling thru distributors, it's
multi-billion-dollar sales immediately drop to zero, long before
customers learn that HPaq sells direct and become cumfortable with that.
HPaq cannot survive a several-month hiccup in its sales.

2. HPaq has contracts with its distributors not to compete against them
by selling direct. HPaq would immediately be facing as many lawsuits as
it has distributors.

How did Dell get to this clearly advantageous marketing position? By
doing so early in the game, before others discovered the advantages of
the Dell business model. Like the man said, Mike Dell is a genius
(marketing division). Honest.

Dell's low prices are the product of a superior business model, not of
bottom feeding. There is a company out there with ~20% of the market
that _is_ a bottom feeder. That company is not Dell.

On Sat, 01 Nov 2003 17:42:56 GMT, "Dean Kent"
wrote:

"Robert Myers" wrote in message
.. .

Dell is a bottom feeder. He lets other people take the risks,
contributes nothing of value, and has admirers calling him a genius.


And you, and the others bashing Dell, are the *true* unsung business
geniuses, right?

As with financial analysts and brokers - if you are so knowledgable, what
are you doing here?


Did you bother to read my post?

RMTo shift the subject, but still apropos of your post, *most* of us
RMhave been jerked around wildly one way or another by powerful
market
RMforces in a fast changing business. Maybe some of the posters here
RMthink they understand those forces, and maybe some people think I
RMthink I understand those forces. I don't.

If I have a problem with the way someone does business and it relates
to the technical subject matter at hand, I believe I have a right to
express my opinion. You have a right to disagree, but when you resort
to name-calling in argumentation, you raise the suspicion that you
have nothing substantive to say. In any case, you lower yourself
substantially in the estimation of most people worth worrying about
without advancing your own argument in any way.

RM

On Sat, 01 Nov 2003 18:49:48 GMT, "Felger Carbon"
wrote:

"Robert Myers" wrote in message
.. .

Dell... lets other people take the risks, contributes
nothing of value, and has admirers calling him a genius.

That's three comments. Let's take them one at a time:

"lets other people take the risks". This is bad?? You _like_ to be a
pioneer with arrows stuck in your back?

Who said anything about me being a risk-taker? I have a short
attention span, and I get bored easily. I do what interests me. If
it involves risk, I try to avoid it, but if I want to do it badly
enough, I'll do it anyway. Draw your own conclusions about what kind
of behavior I admire.

"contributes nothing of value". Dell holds its supplier's feet to the
fire over quality because it's expensive to support failed equipment.
Dell does _not_ buy from the lowest bidder unless the quality is there.
The fact that in a fairly recent survey of users Dell came out near the
top and HPaq near the bottom is no accident. Providing a timely, low
cost, good quality product contributes nothing of value??

(Yes, Keith, I know you prefer IBM portables. But IBM portables are
very expensive. Dell's portables are as good as any comparably priced
product.)

Dell makes virtually no contribution to the fund of knowledge of the
community at large and makes it harder for companies that do
contribute to the knowledge of the community at large to generate
enough margin to do so.

If I published the short story I wrote about my interactions with
Dell, I probably would get sued. High quality? Yeah, right. I had
more than one problem with my little lemon, and when Dell told me I
was going to have to pay for a replacement for my famous brand name
CD/RW (still under warranty) because I had "jammed" it, I took a
screwdriver to it. It was held together with (no kidding) _tape_, and
in order to reassemble it, you had to bend the metal piece that was
held on with tape. The drive would work if it was upside down, but
not if it was right side up. I finally got the drive reinstalled so
that it worked. When I called Dell to tell them I wanted nothing
further to do with them, they _insisted_ on sending someone out to
replace the drive.

"has admirers calling him a genius." You are dead right. And
marketingwise, Mike Dell _is_ a genius. The low prices Dell offers
(while making a profit, unlike competitor HPaq) are based on Dell's
innovative business model. For readers unfamiliar with this business
model, let me explain:

HPaq sells through distributors. This means a price markup at the
distributor. Dell does not have this expense, since it sells direct to
the customer, mostly by taking advantage of the internet.

Dell didn't invent that business model. Leading Edge did, afaik,
although maybe somebody knows better history than I do. What Dell
did, which is what got Yousuf all up in arms, is to get Intel to give
him a low enough price on Intel motherboards that he could drive the
companies like Leading Edge, which were relying on imported parts, out
of business.

Since HPaq has inventory sitting at its distributors, it costs HPaq a
lot of money to increase sales since it first has to increase inventory,
and that costs money. In addition, HPaq has to pay its suppliers long
before money from the end customer wends its way back up from the
distributor. HPaq has (necessarily) an enormous investment in
inventory, Dell almost none - two days' worth?? More important, Dell
collects from its customers in an average of 8 days, and pays its
suppliers in the usual time - 30 to 60 days, same as HPaq. This means
when Dell increases sales, it actually _increases_ Dell's cash flow.
That, folks, is genius!

Dell is a genius by comparison with HPaq. That is called knocking
down a straw man.

Why doesn't HPaq switch to Dell's business model? It can't, for these
reasons:

1. The day HPaq stops selling thru distributors, it's
multi-billion-dollar sales immediately drop to zero, long before
customers learn that HPaq sells direct and become cumfortable with that.
HPaq cannot survive a several-month hiccup in its sales.

2. HPaq has contracts with its distributors not to compete against them
by selling direct. HPaq would immediately be facing as many lawsuits as
it has distributors.

How did Dell get to this clearly advantageous marketing position? By
doing so early in the game, before others discovered the advantages of
the Dell business model. Like the man said, Mike Dell is a genius
(marketing division). Honest.

Mike Dell is a wheeler dealer who took a successful business model
invented by others, spiffed it up, and made alot of money off it.
Michael Dell:LeadingEdge::Lotus:VisiCalc. I'm not a big admirer of
Lotus, either.

Dell's low prices are the product of a superior business model, not of
bottom feeding. There is a company out there with ~20% of the market
that _is_ a bottom feeder. That company is not Dell.

That there is a company out there that is even worse is not a
particularly attractive defense.

RM