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Dell to Make Switch(es)

Austin, Texas-based Dell Computer Corp. Wednesday vowed to introduce a line of network switches for small and medium business customers in the U.S. beginning in its third quarter this year.

Dell will call it the PowerConnect line and hopes its reputation for delivering quality servers and computers will offer a nice piggyback platform on which the switches may ride. Switches are invaluable in zipping data from a server or computer to an individual target PC without sending the info across an entire network.

The strategy is hardly huge, but nevertheless important in the company's opinion; While Dell already sells an array of networking gear under third-party agreements with the likes of industry leaders Cisco Systems Inc., Nortel Networks and 3Com Corp. , the outfits said that customers have asked that Dell specifically supply their own brand of switches. Dell, however, will retain its third-party agreements, according to spokesperson Michelle Mosmeyer.

Mosmeyer told InternetNews.com Wednesday that Dell hopes to benefit from a direct business model, which will yield greater customer interaction.

"Companies that buy computers buy networking products and buy them often," Mosmeyer said. "This adds an extra option for our customers."

Technology Business Research analyst Brooks Gray said the move was a positive one for Dell, who will benefit from incremental revenue.

Gray told InternetNews.com he also believes Dell, whose original equipment manufacturer (OEM) for the deal is Delta Electronics, will be able to ramp up volume without having to spend as much as firms who make their own products in-house; the hardware firm doesn't have to worry about inventory or investing in research and development.

"There is the opportunity for Dell to be highly successful through price aggressiveness," Gray said. "Management may be able to decrease margins while ramping up market share. A majority of PCs are sold through reseller channels and that's typically where you'll see switching sell as well." Gray also noted there is little chance for Dell to suffer from vendor failure (a la NetGear, which could not achieve volume) with the way it has approached its entrance to rolling out switches.

Dell's foray into switching isn't its first dabble in networking; it also offers caching and load-balancing servers and some networking products in its software and peripherals business.