Dell Takes Aim at Enterprise

 
 
By Jeffrey Burt  |  Posted 2006-06-07
 
 
 

Dell is using the unveiling of new servers to launch an aggressive campaign designed to show that it is more than simply a box maker.

The Round Rock, Texas, company on June 7 is rolling out three new PowerEdge servers powered by Intels dual-core "Dempsey" Xeon processors and, later this year, by the Xeons code-named Woodcrest.

In addition, the company in late June will introduce the next generation of its blade servers, the PowerEdge 1955, again first with Dempsey and then with Woodcrest, according to Jay Parker, director of worldwide marketing for the PowerEdge server line.

However, Parker said the introduction of the new servers will kick off a push by Dell to highlight not only its systems technology but also software, services and its partnerships.

"We see the new servers as the foundation, as the anchor, of a new initiative in the enterprise space," Parker said. "Most people in this space see Dell as a box maker, not as a partner or as a solutions provider."

Thats going to change, he said. Dell is going to aggressively price the new systems, which will offer a 150 percent performance improvement over the current PowerEdge servers and a 25 percent decrease in power consumption, Parker said.

The combination will enable Dell to offer to assume leadership in crucial metrics, he said.

"We will have the price/performance and price/performance-per-watt leadership across every server category [in which Dell plays] in the second half of the year," Parker said. "Youll see us be aggressive with this message and with pricing. … Were very confident in this, and youll see us take a different posture then we have in recent months and years."

Parker said Dell has not seen the same level of concern for thermal and power issues among its customers as other vendors have, but the company understands that those concerns are growing and Dell is now focused on addressing them.

Dell last month took a key step when it announced that by the end of the year, it will start shipping a four-socket server powered by Advanced Micro Devices Opteron processor, which has held a power-efficiency advantage over Intels Xeon chips. The move was applauded by many industry observers, who said Dell was overdue in adopting AMD technology.

Dell also had been hearing from customers about the need to address thermal and power issues. On June 5, Dell customer Rackspace Managed Hosting announced it was going to start buying Opteron-based systems from Hewlett-Packard. Officials said it was important for a fast-growing company like Rackspace, of San Antonio, Texas, to deal with multiple vendors, but they also said that they could no longer wait for Dells AMD-based system to come out.

However, Parker said that with the new Dell servers, customers will no longer find a benefit by choosing AMD systems over Intel servers.

In addition, customers are no longer looking to Dell to only sell them servers, Parker said. Instead, they are looking for a company to help them sort through the clutter in their data centers.

"What customers are really asking is to help them get rid of that chaos [in the data center] and help them with managing it," he said.

With the new servers, Dell is helping in a number of ways beyond simply using the more energy efficient chips from Intel. The new two-socket systems—the 1U (1.75-inch) PowerEdge 1950, the 2U (3.5-inch) 2950 and the 5U (8.75-inch) 2900 rack or tower server—are designed to enable easier accessibility and maintenance, he said. Latches make is easier to get inside the systems, and color coding lets users know what they can fix themselves and what components are hot pluggable. They also feature programmable displays for better monitoring, he said.

They also offer a common software image and take advantage of Dells OpenManage 5.0 management software, which includes such features as a new management console and new graphical monitoring tools that track such data as temperature thresholds.

Over the next few months, Dell also will roll out enhanced and new services offerings, an area that that the company is not given enough credit for, Parker said. Dells services business has a $5 billion run rate and 3,000 employees, plus a number of partners, he said.

Over the last two to three years, Dell has overseen about 4,000 storage-area network implementations and 500 Unix-to-Linux migrations, Parker said. Among the offerings are managed services and virtualization planning and implementation services.

Dell competitors are predictably skeptical of Dells enterprise push. Graham Lovell, senior director of Sun Microsystems Opteron-based x64 servers, said Dell has little more than low prices to offer enterprise customers. And those low prices cut deeply into margins, making it more difficult to invest in the types of services that enterprises are looking for, said Lovell in Santa Clara, Calif.

In addition, he said, Dells focus on the one- and two-socket space means that not enough attention is being given to the markets for four- and eight-socket, where virtualization is finding its greatest traction.

"We see them in the market as a price spoiler more than anything," Lovell said.

However, one industry observer said Dell is making the right moves. Brooks Gray, an analyst with Technology Business Research, said the combination of services with the OpenManage software has Dell going in the right direction. Partnerships, such as the one with storage giant EMC, has helped Dell broaden its portfolio.

"In the enterprise market, the perception of Dells capabilities may actually be lower than what those capabilities are," said Gray, in Hampton, N.H. "Theyre headed down the right path."

He said two key steps for Dell will be to build up its Advanced Systems Group sales team and price the servers aggressively. "I see that as a one-two punch," Gray said. "They may need to sacrifice a little margin to get that return, but I believe that [CEO Kevin] Rollins and [Chairman] Michael Dell will do just that."

In Dells earnings call May 18, Rollins indicated that Dell would be aggressive in its pricing for multiple products, from servers to PCs.

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