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Strategies & Market Trends : Stock Attack -- A Complete Analysis -- Ignore unavailable to you. Want to Upgrade?

To: Sonki who wrote (11846)	7/12/1998 5:37:00 PM
From: Nancy	Read Replies (1) \| Respond to of 42787

Read the last part of the interview. DELL doesn't see it necessary for it to provide service directly - that the service and product does not need to be integrated. ---------------------------------- For a corporate chieftain who built his reputation on personal computers, Michael Dell is talking a mean workstation and server game. And so far, he seems to be backing up his talk. His Dell Computer Corp. has sold large central computers known as servers for less than two years. Dell started selling workstations, or high-powered desktop machines, less than a year ago. Yet the direct PC seller is No. 2 in servers and No. 1 in workstations, based on units shipped in the U.S. That's just a start, Dell says. The company announced plans earlier this week to step up its large-scale computer offerings. Dell introduced new workstations and servers based on Intel Corp.'s new Xeon processors. The company is entering the storage system market by selling hard drives, tape backup drives and storage management software. Dell plans to make even bigger computers, offering by mid-2000 mainframe-like machines that use Intel's upcoming Merced processors. Dell believes he can undercut the prices of his competition by using his company's direct-sales method. Dell spoke with IBD Tuesday about the company's plans in enterprise computing. IBD: What's your definition of enterprise computing? Dell: We're looking at the products, services (and) alliances that take Dell up into the high end of the traditional Unix space. The NT market (for Microsoft's NT operating systems) has broadened significantly. NT servers way outship Unix servers at this point, and Dell has become the No. 2 provider of servers in the United States in a pretty short period of time. Now we're taking it to a whole other level. We've got these machines now in the data centers like Merrill Lynch, Microsoft and Nortel (Northern Telecom). In fact, our own company works on Dell machines. Customers are comparing these products to Sun (Microsystems) or IBM. IBD: What does the entrance into enterprise computing mean to your company? Dell: Dell's been growing quickly across its entire business, but that's been most obvious in the server and enterprise business. Last quarter, the enterprise business grew (about) 180%. With the new products, we are broadening the breadth of the market we can cover. We're doing all this by bringing unparalleled efficiency and value to the market using our direct model. That's why you see Dell growing at five times the growth rate of the market. IBD: What are your largest target markets, and how are you reaching them? Dell: The interesting thing about these products is that they can be deployed across a wide variety of industries - financial services, manufacturing, telecommunications. Dell's strategy is to partner with leading application firms and demonstrate our competency with firms like SAP. We have the first Xeon-based server to be SAP-certified. And we've been working closely with Oracle's server. IBD: Do you think workstations and servers will become low-margin businesses, just like PCs? Dell: I think it depends on how you define a low-margin business. Look at our desktop business. We think it's very good. Others would think it's a very difficult business, but that's probably because their cost structure is inappropriate. One man's price war is another man's everyday normal competition. Yes, we want to bring more value to the market using our direct model. IBD: What limits does Dell have pushing up into very high-end computing? When do those limits begin to affect customer choice? Dell: We've been expanding our capabilities with new products, new partnerships and new services. I think what you're going to see with NT 5.0 is that increasingly large applications are moving off of traditional platforms. You don't find companies that are moving their applications for the sake of moving them. They're looking for robust NT platforms. But let's not make a mistake here. Mainframes are not all going to go away tomorrow. This is not an announcement of the death of the mainframe. IBD: How big of a role do services play in your enterprise strategy? Dell: With complex enterprise servers, the services are very unique. Customers require instantaneous response. They require system engineering. Dell's been building its own system engineering and consulting resources for some time. They (also) require partnerships with firms like Andersen Consulting, EDS (Electronic Data Systems) and KPMG (Peat Marwick). One of the notions out there that perhaps has people confused is that you have to integrate products and services. But that's not at all demonstrated in the market. You see a wide variety of partners. We believe that through partnerships and by focusing on what Dell does best, we can continue to grow our business. There are some areas where we are building our own services capabilities, like our financial services business, Dell Financial Services. And there's Dell Plus Factory Integration, where we load custom software. IBD: How are you competing against companies with more experience offering enterprise services, such as IBM? Dell: If you look at IBM's server market share in the U.S. in the first quarter, it was 10%. Ours was 14%. We're about 40% larger, and growing at a much faster rate. To the extent that there are services required for these products, it's pretty clear that Dell has either been able to provide them, or the customer does not make a decision to buy them attached to the products. //////////////////////////////////////////////////////////// Copyright (c) 1998 Investors Business Daily, All rights reserved. Investor's Business Daily - Computers & Technology (07/01/98) Dell Computer Swims Directly To Deep End By Michael Tarsala Transmitted: 07/09/98 00:16 (p0acem7m)