Mohan:
re <<2-fer one-sale-Beat that Mr.Competitor>>
Same Article, See footnotes on market share:
Dell Computer Corp.
The Wall Street Journal -- March 1, 1999
Technology:
Dell Computer to Launch Workstation
With Two Intel Chips, Aggressive Price
----
By Gary McWilliams
Staff Reporter of The Wall Street Journal
Dell Computer Corp., continuing the aggressive-pricing strategy that has led to rapid gains in market share, today is announcing souped-up engineering workstations using two of the latest Intel Corp. microprocessors for nearly the same price that rivals are charging for single-microprocessor workstations.
The move is bound to spark new questions about Dell's relationship with Intel, Santa Clara, Calif. Rivals have claimed that Dell's ability to sell Intel's latest and most-profitable microprocessors wins it favorable pricing. The chip maker's Pentium III line was announced last week and sells for about $450 apiece.
Dell, Round Rock, Texas, said its Precision workstation with two Intel 450-megahertz Pentium III chips will cost $2,372. In contrast, Hewlett-Packard Co. and Compaq Computer Corp. Friday each announced a similar machine run by just one Intel microchip and priced within 5% of Dell's machine.
Linda Hargrove, Dell's vice pre sident of workstations, said the pricing reflects only the company's lower costs from its lean inventory and lack of reseller fees compared with rivals. "I'm certain we've not advantaged on the Intel side."
Dell's newest dual-processor workstations are designed to appeal to customers looking to switch from high-powered, reduced-instruction set computing, or RISC, workstations, Ms. Hargrove said. "We spend a lot of time working the price advantage," she said.
Indeed, less than two years after entering the PC-based workstation market, Dell's workstation sales have soared past those of International Business Machines Corp. and Compaq Computer to become the second largest seller after Hewlett-Packard. Dell now has 20% of the business and counts such prestigious customers as the National Aeronautics and Space Administration.
The world-wide market for such workstations, used by engineers, financial traders and scientists, is expected to reach $3.2 billion in revenue by 2002, according to researcher International Data Corp. "Dell has been most successful with aggressive pricing," says IDC Research Director Thomas G. Copeland. He said the company has grown in part by tapping ready buyers among the financial-services and manufacturing companies that are also its PC customers.
Michael McQuiggan, engineering manager at Santa Barbara Infrared Inc., Santa Barbara, Calif., says the company is now considering buying six Dell workstations based on its experience with the company's PCs. "Dell's a contender because of its service and compatibility" with the company's existing PCs.
Dell recently started selling and installing widely used engineering programs such as Unigraphics Solutions Inc.'s Solid Edge and AutoDesk Corp.'s AutoCAD. "It's truly one-stop shopping" that mimics the early days of the workstation business, says Dell's Ms. Hargrove.
While the software companies pay Dell a commission for each sale, Ms. Hargrove says the company sees the software's primary benefit as drawing in new workstation customers.
The company's offering of factoryinstalled software has won praise from managers at NASA. "We saved probably in excess of several thousand hours" that would have been required to install software, says Ken Lehtonen, a senior manager at NASA Goddard, which recently bought 400 Dell workstations.
---Dell's Workstation ClimbPC-based workstation market share; fourth-quarter results not yet released
4th QTR 3rd QTR %POINT
1997 1998 CHANGE
Dell 9.4% 20.2% +10.8
IBM 9.4 12.5 + 3.1
Compaq 16.9 17.4 + 0.5
Hewlett Packard 49.5 40.2 - 9.3
Source: Dataquest
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