Dell and Wal-Mart add up to a positive for AMD?

Dell's Wal-Mart PC could be a boon for AMD

Dell appears poised to help out AMD as part of a new venture into retail stores. Dell announced yesterday that it will begin selling desktop PCs at retailer Wal-Mart Stores in the U.S. and Canada this coming June. News reports say the first desktops to be offered on Wal-Mart shelves will be equipped with AMD chips. The Associated Press, for one, reports (link) that Wall-Mart will carry two specially-configured Dimension E521 models. The E521 is one of Dell’s two AMD-processor consumer desktops, introduced last fall.

The announcement comes at an opportune time. Neither Dell, nor AMD are at their best right now. AMD’s first quarter loss widened to $611 million thanks to its integration of ATI. But it was mainly due to lower unit shipments on a year-to-year basis. Dell’s first quarter numbers aren’t out yet—they arrive next week—but I think it’s safe to say the PC maker is expected to show a continued decline in desktop PC sales. Dell’s fourth quarter earnings showed a 17.5% decrease in desktop unit shipments, which equaled a year-to-year decline of about 1 million units. (That’s no a typo. It comes straight out Technology Business Research’s fourth quarter report on Dell.)

Even though Dell’s initial desktop sales via Wal-Mart are likely to be relatively small, think hundreds thousands of units versus millions of units at first, this could be a win for AMD. I'll caution that neither Dell nor Wal-Mart are discussing the exact configurations of these new machines yet.

However, I think it’s pretty clear that both Dell and AMD would benefit from the additional desktop unit shipments in the second quarter. Dell must broaden its computer sales to compete with Hewlett-Packard. Although Dell is holding its plans close to the vest at the moment it will no doubt take AMD and Intel, possibly once it broadens its retail initiative, along for the ride.