Dell Gears Up in Server Space

Dell computer corp. is putting its money where its mouth is when it comes to moving beyond its dependence on PC revenue. Last week, the company announced several new servers—including a 32-processor system manufactured by Unisys Corp.—and rolled out enhanced consulting and management services.

The announcements by Dell officials at a New York press conference underscore the companys bid to boost its non-PC revenue, an effort analysts say is becoming increasingly important amid growing concerns over slowing PC sales. PC sales currently constitute more than 75 percent of Dells revenue.

Perhaps the most significant of Dells announcements last week was that the company has signed a letter of intent with Unisys to market in the first quarter of next year a 32-processor server that will be based on the Unisys Cellular Multiprocessing server architecture. The as-yet-unnamed server will use Intel Corp. 32-bit, 700MHz Pentium III Xeon processors and be able to accommodate Intels 64-bit Itanium processor when it goes on sale in the first quarter of next year.

While Dell, based in Round Rock, Texas, has made significant advances in server sales—rising from being the 10th-ranked Intel-based server vendor worldwide in 1996 to its current position as the second-largest—the companys product line has lacked the large multiprocessor servers that appeal to major enterprise customers.

Although Dell doesnt expect to sell many of the 32-bit systems—they can cost more than $1 million—an official said the company felt compelled to match its competitors offerings.

“Its clearly not a volume market opportunity,” said Kevin Libert, director of marketing for Dells Enterprise Systems Group. But Libert said that at the Windows 2000 conference in San Francisco in February, “if you looked on stage, we were up there with IBM, Hewlett-Packard [Co.], Compaq [Computer Corp.] and Unisys … and we were the only major player on stage without a 32-way, so it makes sense to round it out.”

The high-end server strengthens Dells overall ability to market its products to large enterprise customers, many of which are increasingly relying on large multiprocessor systems to handle a surge in Internet-related commerce.

Dell also announced expanded consulting services for large enterprise customers, aimed at assisting in the deployment of Windows 2000 and helping fine-tune computing infrastructures to handle rapidly increasing workload demands. The company also touted several new on-site and remote management capabilities.