Dell Testing AMD Waters

Updated from 2:28 p.m. EST

Is Dell(DELL Quote), the staunchest ally of Intel(INTL Quote) in the computer world, ready to see other people?

In a research note published Monday, Legg Mason analyst Cody Acree noted that Dell has quietly begun selling processors made by Advanced Micro Devices(AMD Quote) on its Web site. Dell is not offering any computers with built-in AMD processors; rather, it is selling stand-alone AMD chips.

"Whether Dell will, or will not, offer AMD systems is anyone's guess, but the likelihood seems to be increasing, in our opinion," wrote Acree, whose firm has provided services to Intel in the past 12 months. "Why would Dell be willing to sell stand-alone MPUs if the next logical step were not to begin offering complete systems?"

A Dell spokesperson wouldn't answer that question, saying the company does not comment on speculation. He said that while Dell currently ships all its PCs with Intel processors, it is always evaluating technology from AMD and other companies.

However, this isn't the first time that rumors have surfaced that Dell is considering adding AMD processors to its lineup. And with AMD's increasing importance in the marketplace, and Dell's recent missteps, the prospect of the two companies hooking up takes on greater significance.

Last week Dell pared back its guidance for the third quarter, which it reports Thursday, cutting its revenue outlook and revising its EPS estimate to the low end of its previous guidance.

That warning underscored questions about Dell's strategy of offering only Intel-based PCs and the competitive disadvantage inherent in such a tack. The question is particularly poignant in the market for industry-standard servers, where AMD's Opteron processor has recently displaced Intel as the performance leader. The Opteron's strength has won over Hewlett-Packard(HPQ Quote), IBM(IBM Quote) and Sun(SUNW Quote), which have all added AMD-based servers to their catalogues in the past year and a half.