Dell-AMD move a 'non-issue' in Asia

The hardware vendor's decision to sell most of its AMD-based PCs via offline channels won't hurt the chipmaker, as its online sales are not that significant to overall revenues, says analyst.

AMD may not have much to fear from Dell's decision to sell most of its AMD-based PCs for consumers via retail and phone channels instead of online, particularly in Asia, according to an analyst.

That's because Web sales do not actually impact Dell's revenues as they are widely believed to be, said Bryan Ma, IDC's Asia-Pacific director of research for personal systems.

Ma told ZDNet Asia in a phone interview that it was a common misconception that most of Dell's sales are derived through the Web. Dell's direct model, he pointed out, includes both Web sales as well as corporate sales.

Globally, the Web is responsible for about 20 percent to Dell's total shipments and in the Asia-Pacific region including Japan, only slightly over 10 percent of PCs are shipped because of online sales, said Ma.

Dell's recent move was said to be a blow to AMD. Up till May 2006, Dell had been using Intel processors exclusively in its products. About three months after Dell announced it would put AMD chips into its servers, the pact extended to include laptops and desktops.

ZDNet Asia understands from a Singapore-based Dell spokesperson that the announcement is a "global strategy", and that it will affect markets in which there are retail partners. Dell will continue to offer AMD-based product offerings through the Web in countries where there are no retail partnerships.

In Asia, Dell has partnerships with Bic Camera in Japan, GOME in China, Courts in Singapore, and most recently TecAsia in Malaysia. More retail tie-ups are in the pipeline--Dell is currently in discussions with potential partners in the region.

IDC's Ma said it was not clear why Dell has opted for the move. Describing Dell as a strategic partner for AMD and one that the chipmaker had pursued for a long time, he added that it would be in the best interest of both companies to "develop their relationship".

In a statement e-mailed to ZDNet Asia, Dell said that the company is "committed to the AMD product lines as a long-term partner" to provide its customers with "maximum choice".

Bryan Low, AMD's vice president and managing director for South Asia, also expressed confidence in the relationship between the two companies, saying that "AMD and Dell continue to have a great partnership".

"Dell recognizes the significant growth opportunities in retail with AMD and is in the process of re-distributing its product mix as it does from time-to-time," he explained in an e-mail.

For Ravi Shekhar Pandey, syndicated research manager at Springboard Research, the more important issue at hand over the longer-term is what Dell plans to do with its product line-ups.

"In the long term, it's not important whether Dell wants to sell AMD through the Web or…through retail stores or phone; what's going to be significant for AMD is whether Dell wants to sell AMD at all or just wants to focus on Intel," said Pandey.