The Dell - Intel Conspiracy

There is a conspiracy theory going around Wall St, saying that the adoption of AMD is an Intel-Dell plot. The move was designed to be a win-win for both Dell and Intel with AMD being the loser. The timing of the adoption says it all. First we have the suit filed by AMD, then we have the release of Core2Duo, third is Dell’s inability to increase market share faster than major OEMs and lastly, Intel’s eroding ASP.
The meeting was held around Q1 2006 between top board members and senior fellows. The plan was simple and clever. The adoption of AMD solves a lot of Intel and Dells problem.

First the lawsuit, with Dell adopting AMD publicly because of design coincides with Intel’s defence. It shows that AMD can grow if it has superior products. Secondly, the timing of the adoption months prior to the release of Core2Duo doesn’t make sense from a performance point of view. Dell knew what Conroe was like just like when Apple did. But for Intel to get rid of AMD being entrenched in the high ASP segment, it needs someone to suck out its output from the high end segment. It has accomplished this by Dell taking most of the X2s. It would be silly now for system builders to develop AMD based systems from a very unreliable supplier. It is almost guaranteed that their next systems will be close to 100% Intel. Intel will now move in to take the business away from AMD while AMD is stuck with Dell. Dell can now make cheaper PC’s thanks to the discount it gets from AMD while leaving Intel alone at the top end. Dell can now expand and compete with other OEMs while Intel’s ASP goes up. The evil plot in all this is that Dell reduces orders just at the point when the channel has lost interest in AMD resulting to a massive inventory build-up for AMD. Expect this to occur next quarter.

Also, one of the items discussed was to create a decoy. They used Rahul Sood as means to show that Dell adopted AMD to become competitive. Again, this doesn’t make sense with Core2Duo coming but they needed to divert the attention.