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Dell to launch blade server line

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CIOL Bureau
New Update

Caroline Humer

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NEW YORK: No. 1 personal computer maker Dell Computer Corp., the Round Rock,

Texas, company rose to the top of the personal computer industry in 2001 by

using its direct-to-customers sales model to drop prices and take market share

from competitors like Compaq Computer Corp., Hewlett-Packard Co. and Gateway

Inc.

It has also tried to transfer that business model to other areas, including

computer servers, data storage machines, computer services and computer

networking products. Dell said it would begin shipping in the third-quarter

"blade" computer servers, which are made of small tissue-box-sized

computing modules that are easy to set up and take apart.

A traditional Dell "rack" server is based on components the size of

a pizza box that aren't quite as flexible as a blade but which have more

computing power. Competitors, including HP and Compaq, have launched versions of

a "blade" server to meet increased demand for smaller, less

power-hungry servers.

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Dell chief operating officer Kevin Rollins said blade servers will have

higher margins than the Dell's current server products.

Rollins, who was speaking at a press conference ahead of a Thursday morning

meeting in New York with analysts, said he expects Dell to benefit from such

industry trends as emphasis on reducing total computing cost, the consolidation

of servers and easier management of those servers.

"Where others resist standardization, we embrace it," Rollins said.

Dell also said that it would begin selling by the end of the year a second type

of modular computer server, called a "brick" server, that is designed

to be as flexible as a blade server but with more computing power.

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Blade servers, for instance, are designed to power Web sites while a brick

server will have enough computing power to handle more demanding applications,

one analyst explained. Blades and bricks aren't expected to account for more

than 1 percent of the overall server market in 2002 or 2003, Giga Information

Group analyst Adria Ferguson said.

"It's still developing so I think people are going to be somewhat

hesitant to pick up adoption, but it will happen gradually," Ferguson said.

Server makers have turned to standardized computers that are based on

microprocessors made by No. 1 chip maker Intel Corp. in order to save money on

development costs. For instance, Dell on Wednesday also introduced two new

servers based on Intel's new Xeon chip.

In recent weeks, competitors including IBM and Unisys Corp. have announced

plans for revamped Intel-based servers that they say will be more powerful.

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