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Dell challenges HP, IBM

In keeping up with stiff competition in the data centre and server space, technology powerhouse Dell has launched new server, storage and system management products that it says will ease configuration and management of data centres. The new products form the basis of virtualised environments and could help customers reduce energy, hardware acquisition and system maintenance costs.

The products come at a time when vendors are focusing on integrating storage, server and networking infrastructures as customers tighten IT budgets amid a global recession.

Networking giant Cisco, recently caused a stir among server vendors when it launched its Unified Computing System, which includes virtualisation technology, services and blade servers to help enterprises develop and manage server installations in data centres. The move brought Cisco in direct competition with HP and IBM in this arena.

Dell is looking to expand its portfolio and become an end-to-end provider of hardware, services and management software, says Brad Anderson, Senior VP of large enterprise at Dell. While HP and IBM have been known to have software offerings, this is still a relative new area for Dell which has had to form alliances with EMC on the storage software side. Dell wants to provide consulting services that help customers put together computing resources to realise cost savings.

Unlike IBM and HP, Dell isn’t known as a software powerhouse, so the company’s announcement of a systems management platform is a significant departure, said John Spooner, senior analyst at market research firm Technology Business Research.

The software platform which has been unveiled globally dubbed Dell Management Console (DMC), brings all device and task management controls under a single application and console. The software, developed in partnership with Symantec, makes it easier for enterprises to manage hardware and software resources across virtualised environments.

"Dell’s been working for some time to develop a management platform for servers, and this is it. It’s an effort to increase customer satisfaction and in so doing improve Dell’s ability to win business from competitors such as HP," Spooner said.

Mohamed Halawa, Enterprise Marketing Manager, Dell Middle East, says the company is committed to simplifying IT so customers can save time, reduce expenses, and focus on their core business. The new DMC improves systems management with a single view of the entire infrastructure. “In addition, our approach to open-standards and partnering with systems management vendors mean that our mutual customers get more management functionality with fewer management tools,” he says

Halawa says as storage demand continues to go up with CIOs wondering how they can contain these growth with limited budgets, Dell has brought to market solution that will not only make it easier for organisations to deploy these solutions but also lessen their dependence of third party system management software for Dell server offerings.

Customers so far have had to rely on third-party system management software on Dell servers, and with DMC, Dell has a response to HP’s OpenView and IBM’s Tivoli offerings, said Charles King, principal analyst at Pund-IT. However, Dell still has a number of steps to take before becoming a real threat to IBM and HP, which offer big-iron products such as Unix servers and more expansive integrated offerings.

Relying solely on x86 platforms will ultimately limit Dell’s ability to effectively compete with HP and IBM in the high-end server and mainframe arena, King said. Dell might fill that product hole through acquisitions of smaller vendors, but that is unlikely to happen. Dell may be feeling pressure to jump into the high-end space, but it won’t neglect its base in midrange and low-end servers, King said.

To that effect, the company has introduced new PowerEdge servers, which will use Intel’s next-generation Xeon processors, designed to increase system speed and performance per watt of power consumed. The servers will also put system management and diagnostic capabilities into embedded chips.

Halawa points out that in the past, Dell servers usually shipped with installation software on CDs, but the software will now go on the chip instead. “This is a major milestone as it reduces the server deployment to within 20minutes as opposed to 3 to 4hours as has been the norm in the past,” he notes.

Dell is the second-largest low-end and midrange server vendor worldwide, behind HP, according to IDC. The new servers could help Dell gain market share if it can beat both IBM and HP on price, King says. IT budgets are flattening due to the recession, and Dell can deliver value to customers with the price advantage it already has, he adds.

"A mixture of price and performance shows they know how to skin six cents out of a nickel on the manufacturing side, but they have developed a more valuable view of the enterprise than ever before," King says.

The offerings play into Dell’s traditional strength in direct sales, which has led to direct relationships with large customers. That is an advantage that could help it compete with Cisco in the integrated server platform space, analysts say.

Dell services

To complement its new offerings which are aimed at HP and IBM, Dell has also unveiled a range of services aimed at assisting clients and channel unlike to tap into Dell’s global technical support infrastructure. The company has unveiled Dell ProConsulting Services, Dell ProSupport and Dell ProManaged Services

Driss El Ougmani, Global Services Director, emerging countries at Dell says the launch of services is aimed at assisting CIOs and IT directors to drive costs out of their operations. “Seventy per cent of IT budgets in organisations are spent on maintenance and only 30% on innovation,” he says.

Ougmani says the services aim to assist enterprises and channel to use and enjoy the same levels and experiences when utilising Dell service offerings. “Ultimately we would like to see CIOs and IT managers push for more innovation without having to spend the larger chunks of their budgets on maintenance.

Technology Business Research’s Spooner agrees and says Dell can bundle all these items – new servers, new management tools – with its storage systems and services, and top it off with software and any other items customers need, and wrap it up with a bow. “This is what Dell very much wants to do," Spooner adds.

Dell has consistently reorganised its product lines in an effort to gain a larger server market share since Michael Dell rejoined the company as CEO in early 2007. The company reshaped its server business and acquired companies such as EqualLogic and MessageOne to boost its storage and services offerings. However, Dell’s server revenue unit shipments declined 18% during the Q4 of 2009, with server revenue down 16% year-over-year during the quarter.

Trying to shed its reputation as an inexpensive hardware vendor, Dell is taking steps to sharpen its enterprise offerings

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