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Dell Inc. is not only the world’s largest maker of personal computers, but is also one of the biggest assemblers of servers, which are sold in much lower quantities than desktops, but at much higher price-points. While Dell may not buy a lot of server central processing units from AMD, the deal between the companies ends de-facto monopoly of Intel on the market of processors, believes analyst Nathan Brookwood of Insight 64.

“We see Dell’s announcement as one more event validating our thesis that the x86 microprocessor market segment has shifted permanently from a monopoly to a duopoly arrangement. AMD has emerged as a credible supplier in all (desktop, mobile and server) segments,” Mr. Brookwood said in a note on Monday.

Market share gains of AMD proof Mr. Brookwood’s believes: AMD’s marker share in x86 server market increased to 22.1% in Q1 2006, up from 16.4% in the fourth quarter in 2005, according to a recently released data from Mercury Research. Back in Q4 2005 AMD commanded 21% of all x86 central processing units shipments in the world, another fact that indicated growing demand for AMD chips and the company’s reputation.

Mr. Brookwood believes that AMD’s success is especially noticeable in multi-processor servers, where Dell historically has not had any significant market share, according to the Insight 64 analyst. The observer claims that AMD has managed to get “almost 50% of this [4P servers] segment”, which means that without embracing AMD64 processors by AMD it would be hard for Dell to expand its share in lucrative MP server market. But if the success of the world’s largest maker of PCs depends on AMD, who would not even be able to satisfy the demands of the giant towards processors for desktops, it means that the market conditions and rules of the game have changed significantly and in AMD’s favour, believes Mr. Brookwood.

“Although Intel and AMD will continue to jockey for leadership regarding performance (or other relevant chip parameters), OEMs now have two suppliers to whom they can turn for the processor components they need. Although the number of chips involved in this Dell deal may be small, its impact on the industry will be huge,” Mr. Brookwood added.

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