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Technology Stocks : Dell Technologies Inc. -- Ignore unavailable to you. Want to Upgrade?

To: HDC who wrote (57090)	8/7/1998 5:42:00 PM
From: rudedog	Respond to of 176387

The enterprise systems market I am referring to excludes mainframes (i.e. S390 architecture) but includes AS400, RS6000, HP 9000 and 3000, SP2, Tandem NSK, DEC VAX, DEC Alpha, Sun, etc. It is defined more by the class of application and infrastructure than the specific hardware, but in today's world, systems with a HW/SW capital cost of $25,000 or more define the lower end of the market. Network storage (a la EMC) and large multivendor storage also count here. Prior to its acquisition of DEC and Tandem, CPQ did about $4B in this space. The Tandem acquisition added about $2B in its own right (NSK sales) and leveraged another $3B in enterprise business (both HW and service) from CPQ through the direct sales and service capability, and some 'halo' effect. The added CPQ business was high end ProLiant servers, professional workstations, and storage systems - in 1997 CPQ passed EMC as the largest seller of multi-vendor storage, second only to IBM. DEC added about $6B in service revenue, $5B in HW, and $1.5B in storage sales. Dell offers Servers and professional workstations which play in the lower end of this space. They have done very well in departmental and application servers (which require less hand holding) and in workstations, with a straightforward value proposition which matches their general model - get the system you want with a minimum of hassle at a good price. Dell's support in this particular market is above average, maybe the best but certainly as good as the best. But the requirements are closer to traditional PC service (where Dell also excels) - get it out the door right, and fix it fast if there is a problem, understand the applications your customers are running and how to make them work well on your hardware. Dell's partnership with DG gives them big-system network storage with Clariion, and their 4-way Xeon servers are big enough to take on most midrange jobs. they have a lot of room in their segment and could continue to double their business at least one more time. But they currently can not bid on the larger systems (with a few targeted exceptions) because they can not easily take responsibility for the whole job. Partnering with EDS and other integrators gives them more capability but they would have a tough time against IBM, CPQ or HP in a complex enterprise bid where the HW and SW are a small part of the whole package. I think they are testing the edge of that space to see how attractive it is for them with a few big deals and some partnering arrangements. This lets them see how well the business fits before diving in with a big investment.