Dell expands into enterprise networking

Dell Computer announced last week its expansion into enterprise networking, following its entrance into the small and midsized...

Dell Computer announced last week its expansion into enterprise networking, following its entrance into the small and midsized business networking market last September.

The move mirrors the vendor's migration from PCs into servers in 1996. Kim Crawford, the company's networking division vice-president, made it clear that Dell plans to offer a full array of networking hardware, including Layer 3 routers, 10-Gigabit Ethernet and possibly even chassis switches in the not-too-distant future.

"We're just applying our business model to something new," Crawford said.

Analysts say that could mean lower prices. Dell's first two offerings, the PowerConnect 3248, a Fast Ethernet switch with 48 ports and two Gigabit Ethernet uplinks, and the PowerConnect 5224, a Gigabit Ethernet switch with 24 ports, are priced at $1,499 (£983) and $2,499 (£1,638), respectively.

"The market's so commoditised that price actually matters now," said Jason Smolek, an analyst at IDC.

"Because budgets are tighter, I was looking to cut costs and not performance, and Dell was pretty much it," said Gilbert Maldonado, information systems manager at commercial printer Capital Spectrum.

Maldonado said the reduction in IT overheads and the ability to do business with a trusted vendor swayed him in his decision last year to purchase the PowerConnect 3024. He added that he is now considering an upgrade to get the greater port density and redundant power supply of the new enterprise-class switches.

Distribution, service and support have become more of a differentiator in the switch market than technology, said David Willis, an analyst at Meta Group. Now that Ethernet standards clearly define what an enterprise-class switch is, Dell can step in and produce hardware that does much of what a Cisco Systems device does, he said. Willis called the Dell switches "the first of a round of Cisco clones that we're going to see".

"It won't be on the cutting edge, but a Cisco expert won't need to be retrained to use it," Willis said.

"I'm not too big on all the bells and whistles with switches. You don't use half of them anyway," said Maldonado

Smolek said Dell would be able to mimic the efficiency of its PC/server supply chain in the networking market, allowing it to undersell its competitors.

The switches will put Dell into direct competition with 3Com, which re-entered the enterprise market in March with a set of stackable switches. Dell will also be in direct competition with Hewlett-Packard as a one-stop hardware vendor.

Dell has already expanded its networking sales and support to all of North and South America, and Crawford said it would extend them to the rest of the world before the end of the year.

Dell should be able to make early gains in the small-to-midsized enterprise market and could emerge as a serious threat to Cisco, said Smolek.

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