Aberdeen concludes... Subject: DELL & NT Workstations.
Jim:
I think CPQ will gain some biz through their direct model (which by the way I hear is nothing new,'grand' dry ice introduction notwithstanding).
I understand CPQ derived 98% of its business through the channels one time which is now reduced to about +80% and if the Channels are unhappy they could easily divert the business away from CPQ to their own White Boxes and or other brands like IBM,HP and others and in this tug-of-war I am hoping Dell will strike when the iron is hot to take full advantage of the situation that may present itself to them.So I am thinking any business CPQ gains through the Direct initiatives may just be neutralized (or even worse)by business lost through the channels to its competition ,it could happen and I won't surprised if it did.<g>
Now here is an interesting study done by Aberdeen Group (author Jay Moore) regarding DELL's foray into NT Workstations.
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(Courtesy-The Aberdeen Group)-excerpts only.
Dell Computer Corporation:
Moving To Be A Leading NT Workstation Supplier For The Enterprise
Preface
It has taken Dell Computer Corporation less than one year to catapult out of obscurity in the technical computing marketplace and into an industry-leading position for NT Workstation shipments for Q2 1998. Using its highly-effective, customer-direct, distribution model, Dell has set its sights on becoming the NT workstation market's sales leader for 1998 - and perhaps more importantly, earn the respect of the enterprise. But, can Dell parlay its NT market presence into a substantial, long-term NT workstation market share based only on its traditional strengths of great price/performance and product availability?
In this Profile, Aberdeen examines Dell's NT workstations - describing Dell's product positioning and market strategies, core technologies, key ISV relationships, as well as Dell's revamped service and support offerings. And Aberdeen concludes that with:
Tremendously increased platform and graphics performance
A significantly improved technical help desk;
Increasingly-solid relationships with major ISVs helping to qualify
and develop third-party software on Dell's NT platform; and
A continued commitment to industry-leading price/performance points
Dell has indeed created the "total package" needed to be the long-term sales leader in NT workstation computing for the enterprise.
Market Positioning
In late July, 1997, Dell made its foray into the NT workstation market. Through efficiencies in manufacturing, using industry standard components, efficiencies in engineering, and its direct-to-the-customer sales approach, Dell has been able to offer its customers the best price/performance points of any top-tier suppliers of NT Workstation platforms. Dell's position as the price-performance leader certainly helped sales of its NT workstations - rising quickly from 0% marketshare in July, 1997 to the sales leader for Q1, 1998!
However, Dell realizes that low prices alone are not reason enough to keep enterprise customers loyal to the Dell platform for future product buys, nor is great price/performance points leverage enough to open new markets for Dell's NT products. In the NT market the "low hanging fruit" has already been picked, and Dell must convince customers that the Dell NT platform has the application performance customers require, and that Dell has a substantial service organization in place to support companies in enterprise settings.
Dell is aggressively attempting to change user perceptions of Dell as a low-cost supplier only - through improvements in products and services as well as with an aggressive marketing campaign. Looking forward into the next millennium, Dell is focusing its technical computing efforts on providing customers with "the total workstation solution" - products, performance, services, and applications while remaining committed to delivering outstanding price/performance.
Dell's Strategies For Market Leadership
In the first half of 1998, Dell rapidly transitioned itself from a nascent NT workstation supplier, to one of the industry's most influential enterprise players. In addition to low prices and a direct sales model, Dell employs other aggressive tactics in order to ascend to the sales leadership position in the NT workstation marketplace:
New Technology: With an 8-day inventory, Dell is quick to bring to market the latest/greatest Intel microprocessor; beating many of its rivals out-of-the-gate with the fastest Pentium II technologies - as it did with Intel's new 100 MHz front-side bus and Xeon microprocessor;
Product Availability: In addition to being able to purchase through Dell's direct sales force, customers can order Dell's NT workstations through the same Internet and phone channels that process large volumes of Dell's PC orders. This allows IS to purchase the high-performance technology from Dell before those who purchase from other suppliers; and
Price/Performance: Across-the-board, Dell's NT workstation products, the Precision 410 and Precision 610, offer customers better price/performance points than equivalent, market-leading NT platforms from Dell's competitors.
To bolster its NT market penetration efforts going forward from mid-1998, Dell is also focusing on:
Target Markets: Dell is well-aware of the many vertical segments of the technical computing market place and has strengthened and focused its workstation efforts to provide custom products, performance, and services to all users in the many technical computing segments - such as CAD, DCC, Financial Modeling, and Software Engineering and Development.
Service And Support Offerings:
In the wake of early criticism, Dell has significantly improved its Service and Support Programs for its Precision workstation customers. A Specially-Trained-On-Precision-Workstations support force internal to Dell, coupled with a cast of thousands of service and support technicians acquired through Dell's recent partnerships with Wang and Unisys, provides Dell with the ability to support Dell technical customers in enterprise settings - such as helping IS manage a complex Unix to NT migration.
Increased Platform Power:
Dell has tremendously boosted the performance of its NT computing platform - the Precision lines of NT workstations. Dell's Precision workstations now deliver the fastest processors and highest-performing 3D graphics subsystems of any NT supplier. From Aberdeen's perspective, this was an important and much needed improvement.
Application Recruitment: Through tighter relationships with major ISVs and its "Develop on Dell" Program, Dell has redoubled its efforts to attract major ISVs with industry-leading applications to qualify, optimize, and develop leading technical applications on the Dell platform.
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Aberdeen Conclusions
To bolster its PWS market penetration efforts for 1998, Dell has focused on target markets; expanded its service and support efforts; and redoubled its application recruitment, qualification, and optimization efforts. Furthermore, with the recent announcement of its second-generation NT workstations - the Precision 410 and Precision 610 Workstations - Dell has increased the processing power of its workstations and significantly improved the graphics rendering capabilities available on its systems, while maintaining its pricing advantage.
Dell's NT workstations now offer users the industry's highest performing NT workstation technologies - processors, 3D graphics cards, and I/O - at industry-leading price/performance points. A recent partnership with Intergraph allows Dell's NT platform to compete in graphics performance at the extreme high-end of NT computing; on par with Intergraph, HP, and IBM.
Additionally, Dell's outstanding manufacturing and distribution model still yields major price advantages for Dell customers. With an extremely efficient direct selling environment and build-to-order sales model, Dell reduces its cost-of-sales and passes the savings onto the consumer - simply out-pricing its competition. Also, this direct-to-the-customer approach allows Dell to roll out the latest NT technologies before Dell competitors can, as well as supplies Dell the industry's fastest time-to-market and highest product availability. Aberdeen also finds that Dell has greatly improved its software solutions offerings by focusing on building the necessary relationships with large volume technical software providers with industry-leading applications to ensure customers have the best level of product availability, performance, and support. Dell has forged strong relationship with key ISVs to ensure that Dell workstations support and optimally run key customer applications.
Furthermore, Dell's new partnerships with Wang and Unisys have greatly strengthened Dell's ability to support its customers in an enterprise setting - now with a services organization staffed by thousands of specially trained workers. Dell also realizes that it must continue to grow and expand its services organization in order to become a true total-solutions-provider in the NT market.
Every aspect of Dell's NT workstation products and strategies has been significantly strengthened over the past twelve months - from products, to services, to business partnerships. In its ascension to the top of the NT ranks, Dell has made all of the right strategy and product decisions in its move towards becoming a respected enterprise supplier. Going forward, the onus is on Dell to continue to execute its NT business plan - something it has proven it is the best in the industry at doing.
Aberdeen expects that Dell will continue to be one of the top three - if not #1 - suppliers of NT workstations to the enterprise for many years to come.
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