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Not surprisingly, Intel was unhappy with
Dell’s decision to opt for AMD as Dell had been using Intel
chips for its servers, laptops, and desktop PCs since it
started selling PCs in 1985. Otellini, Intel’s CEO, said,
“While this is an incredibly disappointing announcement, it
is not totally surprising. We exist inside of an extremely
competitive industry and we have always had to work hard to
win every piece of business.”7
Intel had been the market leader in microprocessors since
1991 despite fierce competition from Samsung, Toshiba, and
Texas Instruments in the semiconductor industry. However,
Intel now faced competition from AMD and small competitors
like VIA and Transmeta, which manufactured low power
processors for computers and portable equipment. |
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Intel had also been facing problems on the earnings front. For the
first quarter of 2006, it reported earnings of US$ 5854 million, as against
the US$ 6,211 million recorded in the first quarter of 2005. Experts were of
the opinion that Intel had taken its market leader position for granted and
had failed to come up with innovative products such as AMD’s Opteron,
considered to be a leading technology in the industry.
Analysts said that the reason for Dell’s shift to AMD was a result of
Intel’s loss of focus on technological development. To add to Intel’s woes,
Microsoft announced that its new operating system (OS) Vista 8, to be
launched by 2007, would not need any hardware upgrade. Intel had expected
that the new OS would boost the demand of its computer chips.
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[7] Scott M. Fulton, III, “Intel CEO Otellini ‘incredibly disappointed’ by
Dell’s AMD decision Scott M. Fulton, III,” www.TGDaily.com, May 19, 2006.
[8] Microsoft Windows Vista is the next generation of Microsoft Windows
after Windows XP. It proposed to integrate security as not an add-on feature
but an integral part of an operating system. It is scheduled to be launched
in January 2007.
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