Dell expands Into enterprise networking

Following its entrance last September into the small and midsize business networking market, Dell Computer Corp. last week announced its expansion into enterprise networking.

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 1U (1.75 in.) Fast Ethernet switch with 48 ports and two Gigabit Ethernet uplinks, and the PowerConnect 5224, a 1U Gigabit Ethernet switch with 24 ports, are priced at US$1,499 and $2,499, respectively.

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

Price certainly mattered to Gilbert Maldonado when he went shopping for switches last year.

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

Maldonado said the reduction in IT overhead 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.

Attack of the Cisco Clones

Distribution, service and support have become more of a differentiator in the switch market than technology, said David Willis, an analyst at Meta Group Inc. in Stamford, Conn. 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 Inc. 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 MaldonadoSmolek said Dell will likely be able to mimic the efficiency of its PC/server supply chain in the networking market, allowing it to undersell its competitors.

The new switches will put Dell into direct competition with 3Com Corp. in Santa Clara, Calif., which re-entered the enterprise market in March with a set of stackable switches. Dell will also butt heads with Hewlett-Packard Co. 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-midsize enterprise market and could emerge as a serious threat to Cisco, said Smolek.

"Dell executes very well, and they have the ability to change the model for the market," he said.

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