Dell Dives Deep Into Data Centers

Dell beefs up its enterprise story with blade servers, software and services.
Publish date:


(DELL) - Get Report

is the latest tech firm to recreate itself, unveiling a slew of new servers, storage options and services in an attempt to drive data center revenue.


M&A talk

still swirling around


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Sun Microsystems


, and networking

Cisco Systems

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now selling servers, Dell is looking to reassert itself in the enterprise.

The Round Rock, Texas-based firm, which competes with IBM and


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, unveiled 14 new products Wednesday.

These include M-Series blade servers, PowerEdge servers, EqualLogic PS6000 storage arrays, new workstations and services offerings.

Better known as a PC maker, Dell is now trying to establish itself as a company offering a broader range of enterprise products, according to Charles King, principal analyst at technology research firm Pund-IT.

"They have very strong relationships with many enterprises, but that has historically been in desktop computing," he said.

Since returning as the company's CEO in early 2007, Michael Dell has tried to bolster the firm's data center business and is now launching x86 servers built with


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next-generation Nehalem processor.

"I suppose you could look at this as something of a coming-out party," said Pund-IT's King, who thinks that the desperate economy could work to Dell's favor. "The turmoil we're in right now has leveled the playing field - it's not as if customers are turning a blind eye to any one company's products."

Word of Dell's product blitz did little for investors, however. Despite a broader advance in tech stocks that saw the Nasdaq rise 1.57%., Dell shares slipped 5 cents, or 0.48%, to $10.36 Wednesday.

Blade servers, in particular, are grabbing

plenty of attention

at the moment. The small-form factor devices offer a way for IT managers to overcome the challenges of space-constrained and power-hungry data centers.

Despite a spending slowdown that has hammered other parts of the tech sector, blade servers continue to grow in popularity. Worldwide blade server revenue grew 33.3% year over year to $5.4 billion during 2008, according to technology analyst firm IDC.

Dell is nonetheless playing catch-up to H-P and IBM, which own 55% and 22% of the blade market, respectively.

The Texan firm ranks third in terms of overall server revenue behind IBM and H-P, but crucially lacks the extensive service and software businesses that its rivals possess. In a tough economic climate, services and software offer tech firms an opportunity to squeeze additional revenue out of customers reticent to upgrade their hardware.

Shrewdly, Dell is partnering with other firms to beef up its software strategy. On Wednesday, the company unveiled its Dell Management Console (DMC), which is based on


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Altiris technology and is touted as a challenger to H-P's OpenView.

The firm also launched its ImageDirect Server service, which pre-configures servers with the aim of reducing users' installation time. Dell already offers a similar service for PCs, and Pund-IT's King thinks that the server version is a step in the right direction.

"Dell does deals where they sell hundreds or thousands of servers at a time, this is something that could really save customers time and money," he said.

The stakes are high for Dell. The company reported an


fourth quarter in February, and its stock is trading well below its 52-week high of $26.04. The firm also announced plans to

lay off

an unspecified number of workers earlier this month.

Undeterred, Michael Dell fired a shot at

IBM and Sun

earlier this week, describing their acquisition talks as a great opportunity for his firm.