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Dell Gunning for IBM, HP Customers

Dell executives Friday elaborated on their enterprise and services strategy, vowing to wrest market share from IBM and Hewlett-Packard by standardizing products and providing managed services for customers.

Basking in the glow of the computer maker's record fourth quarter, Russ Holt, vice president, enterprise engineering, Dell Product Group, discussed several figures from the company's server and storage business.

Holt said Dell's PowerEdge server sales were up 40 percent last quarter while storage revenue grew 47 percent year-over-year. He also said Dell's adherence to industry standards and its multi-year partnership with EMC are helping the company drive down the cost per gigabyte of storage area networks (SANs) by as much as 70 percent.

On the managed services side, Gary Cotshott, vice president and general manager, Dell Services, described how the Round Rock, Texas-based, systems vendor grew its services business by 500 percent in the last three years by allowing customers to drive down hardware costs and lower complexity.

The event was the first in what the company said will be a series of conference calls this year as Dell aims to carve out more market share at home and abroad by selling Windows and Linux-based computing systems, which reached 80 percent of total shipments in 2003, according to research firm IDC.

The goal is to win new contracts and persuade current UNIX and RISC-based systems customers to switch to Dell when their contracts expire.

During the call, Holt described Dell's plans for a low-cost Host Bus Adapter (HBA) device, which he said comes courtesy of advancements in Serial ATA technology .

With the arrival of switches from Brocade and McData and HBAs from Emulex and QLogic, Holt said Dell's plan here is to reset the cost points for SAN infrastructure by offering a sub-entry level HBA, an example of the company's bid to conquer by standardizing gear in certain market segments.

"We have been driving out the costs of arrays, servers, but until recently there wasn't enough competition to drive down the costs of infrastructure," Holt said.

Holt expressed optimism for Dell's scalable infrastructure in conjunction with its OpenManage software tools and partnership with Microsoft.

Announced last November to compete with utility computing strategies from HP and IBM, OpenManage is designed to help customers reduce the number of steps and manual labor that go into managing servers in a data center.

Holt cautioned analysts to separate the wheat from the chaff with regard to HP's and IBM's utility computing strategies.

"These companies actually struggle in the area of management," according to customer accounts, Holt said. "You have to be careful of their marketing message versus their actual management message."

Holt also praised Intel's recent news of 64-bit extensions, which he said will apply pressure to UNIX and RISC -based systems while reinforcing expandability in Dell 2-way and four-way systems.

On the services side, Cotshott said Dell's installed a managed services practice 18 months ago because "what we've found is that customers are asking for a more complete solution and not just a box and a series of point solutions."

Cotshott also cited examples of how Dell's products combined with managed services are helping customers drive down costs. For example, he said a Dell service deployment of a SAN that used to take eight days and cost $18,000 can now be completed for $9,000 in just 2 and a half days.