Dell begins subtle net reinvention

Dell Computer on Wednesday took a huge step in the subtle re-engineering of its image as a PC company when it announced a series of products, services, and initiatives aimed at the Internet infrastructure market.

Although not quite ready to entirely shed its tag as a PC maker -- as competitors Compaq Computer and IBM have -- Dell clearly is focusing on the server and storage space, and in particular the ISP (Internet service provider) and ASP (application service provider) markets.

Citing a 7 million square-foot build-out of data centres around the world over the next few years, Dell chief executive officer Michael Dell called the outsourcing market a "huge opportunity" and called Dell's moves "a change in the fundamental business model."

"Only 5 percent of the servers needed for the Internet build-out are in place," Dell said. "This represents a shift from classical values. It's no longer just PCs, it's phones, appliances, and PCs."

To back up Dell's change in focus, the company announced a series of small-footprint servers, called PowerApp appliance servers. The new 1u and 2u systems are the thinnest Dell has to offer and are specifically designed for packed data centres that are short on real estate. Coming in both Windows and Linux flavors, the PowerApp servers will be geared for specific tasks, like Web-hosting and caching. Prices start at $US1,899.

Dell also announced a number of partnerships with outsourcers of every ilk, including Exodus, NaviSite, and Corio. The Dell Service Provider Direct program aims to capitalise on the extraordinary market for server in the service-provider community. Although most outsourcers partner with just about every hardware company, Dell has put forth a set of focused resources to meet the needs of these critical customers.

Dell executives repeatedly stated that the company's direct relationship with its customers would be the linchpin in its strategy to sell to service providers.

"What is really interesting to them (outsourcing companies) is that we have the customers," says Mike Lambert, senior vice president of the Enterprise Systems Group at Dell.

Dell is also working with Arthur Andersen and Gen3 Partners in a program called "E"xpert Services to help businesses to develop their e-business solutions. Dell executives said they would leverage their years of running a top-notch e-business themselves in doling out advice to clients.

The moves combined to raise questions about Dell selling off a fair amount of its accrued knowledge, both in customer information and e-business know-how, to gain entrance into the burgeoning service-provider market. But company executives shrugged off concerns by citing changes in the overall marketplace, and subsequent changes within Dell.

"There are trade-offs involved," says Judi Webster, vice president and general manager of the Internet Partners Division at Dell. "We've had to refine our internal behavior, in terms of sales force compensation and the sharing of customer information. Customer ownership is morphing and we are making some fairly radical statements."

The company also announced a vague initiative aimed at enabling Internet access through a variety of devices, called Universal Access. In addition, Dell reiterated its commitment to helping the Internet economy to grow by seeding startups both with equity stakes as well as incubator arrangements.

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