Caroline Humer
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.
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.
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.