Dell Wards Off White Box Competition with Price Break

Squaring off with the recently-merged HP/Compaq as well as so-called white
distributors, Dell Monday unveiled its new
small business server, PowerEdge 600SC, slashing the price to below six
hundred dollars.

“Dell’s chief competitor, outside of HP, is a lot of self-built and white
box systems by local assemblers,” said Mark Melenovsky, research manager for
IDC. “[The price break] makes them much more competitive with this assembly
market and white box phase. These kinds of companies have a much lower
overhead than large system suppliers, even Dell.”

According to Melenovsky, one of the challenges for Dell will be garnering
backing from small businesses that enjoy the local proximity and associated
support they can get from a local distributor.

The new release from Dell features DDR memory, integrated Gigabit Ethernet,
and Intel Celeron processors. An upgrade of $200 will land a Pentium 4
processor, and an additional $400 will afford one of Dell’s new PowerVault
100T-Travan40 tape drive.

The 600SC replaces the PowerEdge 500SC, and is designed for small- to
medium-sized business customers who want to migrate from a desktop PC-based
network to a true client-server architecture.

For those wanting a step up, the company also released its PowerEdge 2600,
featuring Intel Xeon chips, Ultra320 SCSI drives, six 64-bit PCI-X expansion
slots, and hot-plug redundant power and cooling. The 2600, which replaces
the PowerEdge 2500, starts at $1,999.

Dell has a significant history with the small- to mid-sized business market,
starting with the introduction of their SC product line in 2000.

“It’s one of the things that really saved them in 2001,” said Melenovsky.
“While everyone else was really focused on the enterprise in 2000, Dell
developed the small and medium business market, and when the enterprise
spending fell away in 2001 they had a pretty strong product line.”

The 600 SC will also battle it out with HP, recently merged with Compaq.
Compaq retains its TC line, and HP has its ProLiant BML 320 and BML360
targeted at the small- and medium-sized business market.

“The ProLiant organization has a pretty strong network of channel partners
that kind of act the role of these local assemblers, where they provide
services and software integration,” said Melenovsky.

The competition between HP and Dell has accelerated on all fronts.
According to Melenovsky, IDC’s Q2 report on the server market, due to be
released later this week, shows a very close race for the U.S. front-runner
between the two, with HP showing better than expected shipments.

In addition, IDC’s projections for Q2 PC shipments showed Dell widening its
lead in the U.S. over HP, whose market share fell 13.2% last quarter.

Dell Monday announced another coup over HP, revealing that they had landed a
multi-million dollar account with Rackspace.

The company, who already has more than 6,000 servers under management,
selected Dell hardware for its base of enterprise hosting customers after a
comparison between Dell PowerEdge servers and Compaq/HP servers.

Terms of the agreement ensure Rackspace will receive early access to Dell
technology as well as enterprise training and product support.

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