PART 2
But the big question for Dell, and the industry, is whether its business model can be a winner in mainstream corporate computing. "The enterprise business — servers, storage and services — has a much higher revenue and profit potential than printers and hand-helds by far," observed Mr. Rollins. "The enterprise market is where the meat is."
When a desktop PC crashes, an office worker may be irritated, but the damage is limited to an individual. But data centers, housing clusters of big machines, are the computing engine rooms of the corporate world, handling companies' manufacturing, procurement, marketing and customer data. They must run constantly and be secure, reliable and versatile.
The computer companies that have traditionally done well in the data-center market stand behind their machines with armies of skilled people and hefty research budgets. These vendors must understand complex, diverse computing environments — requirements magnified by the Internet, which links all manner of technologies. So corporations increasingly want to buy packages of hardware, software and services to solve business problems, like streamlining procurement or tracking customer behavior, instead of buying computer products à la carte and then trying to figure them out.
I.B.M. has been the master of this "solutions" strategy; the successful execution and marketing of that approach fueled its comeback in the 1990's. The logic behing the H-P merger with Compaq was similar — to create a company with the technology, skills and breadth to tackle the full range of requirements of large corporate customers.
Its competitors say that this is a very different business, where Dell must change the way it operates — or stumble. "Dell is seeing the limits of its direct business model and violating the tenets of its model to try to get growth," said Michael J. Winkler, an executive vice president of Hewlett-Packard. "You can argue that Michael Dell is becoming an H-P wannabe, because he's going after the markets where we're strong and entrenched. We're facing an interesting set of battles ahead."
SUSAN WHITNEY, a general manager in I.B.M.'s server computer unit, said Dell might be reaching beyond itself. "In the data center business, you have to make investments in technology, expertise and services," she said. "That requires a different culture and skill set. Dell is trying to get there, but it will be a significant transition for the company."
Mr. Dell, who started the company at 19 in his University of Texas dormitory room, regards such criticism with bemused disdain. Whenever Dell has entered a new market — notebooks, work stations or server computers — rivals have predicted that it would get its comeuppance. They were wrong. "I've seen this movie before," Mr. Dell said. "Hey, order the popcorn. I'm going to enjoy it." |
