Dell’s First Moves

Dell’s First Moves Dell has become the world’s largest supplier of PCs, knocking Compaq of its top spot. This was the direct result of Dell cutting the price of its PCs early in 2001. Riding on a crest of an electronic wave, Dell now seems intent on competing with IBM, Compaq and HP in attacking the enterprise services market, one that it has traditionally avoided. The PC manufacturer has realised that its margins will shrink in its core business, and although it has risen to become the largest PC manufacturer, it will find it increasingly difficult to win market share. Dell has traditionally provided IT deployment and support through partnerships with Getronics, IBM and Unisys, but is likely to provide more services through its own endeavours. Consulting is now a part of the company’s remit, providing storage network and e-commerce operation design services. The addition of more powerful servers and an alliance with EMC adds weight to its entry into the services market.

The recent addition of Jeffery Lynn, ex-Compaq General Manager of Professional Services, and its ability to leverage Dell’s direct sales channel adds weight to its move into the enterprise services market. Although Dell is not associated with the provision of professional services, its direct relationship with customers may enable it to up-sell services. However, Dell’s relatively poor performance in customer service in Europe will no doubt hamper its success of utilising this strategy. With HP and Compaq embroiled in merger negotiation this may be the best time for Dell to strike. Dell’s interest in providing more server capability and storage availability also supplements its move to become an enterprise service provider.

Dell’s alliance with EMC not only extends to co-branding of EMC's CLARiiON line of enterprise storage systems and makes Dell the leading EMC reseller of this product, it also enables Dell to learn and exploit EMC’s core competencies. The future of technical support and installation will develop through EMC representatives training Dell staff.

 

Not all Plain Sailing

Dell is new to the enterprise services business and although it aims to leverage its alliance with EMC it has a long way to go before it can catch up with the likes of HP, Compaq and IBM. It will need to continue to rely on partners to fulfill customer expectations in the field of enterprise services; this may be the true direction it will take. However, this would mean a change in the direct control it normally has over sales, in order to continue down the direct only sales route it will have to be good at managing partners and keeping them content.

Dell will face stiff competition from the likes of Compaq, HP and IBM. Compaq have recently announced its next phase of Computing on Demand strategy. This strategy provides customer with three new offerings, namely:

- Capacity on Demand – managed storage solution – pay per use

- Capacity on Demand for ProLiant Servers – pay per use

- Access on Demand – thin client package – pay per seat

This strategy is supposed to deliver a cost effective, flexible, design efficient and easier manageability over enterprise IT infrastructure. Enterprises will be able to scale their demand up and down depending on requirements, real-time and otherwise.

Dell has some time to go before it can deliver these type of services, however, if it continues to seek partnerships, leverage them and bring in some more key management then it is entirely possible it will successfully attack the enterprise services market.

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