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Dell Computers put a little kibosh on Intel yesterday, announcing in its first quarter earnings release that it will introduce servers powered by Advanced Micro Devices. Reuters reports that in a dim market, Dell and AMD shares soared on the news, while Intel dropped.

From the earnings release:

"In the enterprise, we will launch new ninth generation servers featuring Intel's Woodcrest microprocessors. Dell will also introduce new AMD Opteron processors in our multi-processor servers by the end of the year offering a great new technology to our customers at the high-end of our server line."

The announcement offers a new layer of competition in the chip market for Intel. PC magazine's John G. Spooner believes it could spark price where between the rivals, as cheaper chips could let Dell offer the new servers at lower prices:

But Dell's chief financial officer, Jim Schneider, stopped short of calling the effort a brewing price war.

"The way we look at it now, it's not like trying to ignite some price war, but to see where we can get the best combination of price and profitability for the long term," Schneider said during the conference call."

This is the latest example of AMD consistently moving into Intel territory, a series of events that some have predicted for a while. John Fowler, executive vice president of Sun's Systems Group thinks it's a good move.

"AMD's superior technology and market share growth made this decision inevitable," said Fowler. "Welcome to the party."

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