Darrell - I think DELL is suffering somewhat from being perceived as a PC company. With only 18% of revenue coming from servers, many just lump DELL's prospects in with the PC market, and as DELL grows, they see the hard battle to maintain revenue growth which is well above the growth of the industry.
While few would dispute that DELL is the best managed company in the space, they have seen several attempts to "get out of the box" misfire. I see that a little differently - I think DELL is carefully working to change their market without breaking the philosophy and culture which put them where they are. That is somewhat of a trial and error process, which DELL has thus far managed without too many financial consequences, although there is certainly some "opportunity cost".
Despite management statements to the contrary, I don't think DELL has the wherewithal to go after SUNW. Also, I don't think they really intend to do that. DELL is taking advantage of SUNW's current "rock star" status to help shift perception about DELL. But I think the real agenda is different - the market is changing quickly, and DELL wants to see it shift to a model which advantages DELL. If that happens, they won't have to battle SUNW - they will simply become the supplier of choice for a broad range of new internet infrastructure.
If I am right, we will see DELL fill out their volume server offerings with NAS and similar storage plays, and some clever marketing and sales initiatives which leverage the infrastructure DELL has built so successfully in the corporate segment. That would drive the new economy players to DELL naturally. If that works, we will see a steady shift of revenue upstream into volume servers and storage, which is really what most of the dot-coms need. DELL does not need to compete in the high end if they can capture a good share of the market they currently are well suited to address. |
