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.