At $35.4 billion in sales last year, Dell has become the world's third largest computer company. It is also the fastest growing. Servers, storage, and services are now a critical part of the company's customer value proposition -- and the entry onto the enterprise shortlist of preferred suppliers. Dell's appeal to small, medium, and large enterprise buyers is expanding.
Database Solutions with Oracle
There are more than 22,000 Oracle installations on Dell around the globe. For the better part of a year, Dell has been a reseller of Oracle's database, application, and infrastructure software products in the United States. This program has gone exceedingly well, and one of the results of that success are these recent announcements:
- Dell will sell the Oracle 9i database, application server, and applications in Europe and Asia, in addition to the U.S.
- Oracle's consulting services division becomes a Dell Service Provider. Together, the two companies will deliver fixed-price database migration from DB2, Sybase, and Informix; an implementation fast-track on Dell two- and four-way PowerEdge servers running Red Hat Linux Advanced Server; performance and capacity tuning, as well as DB design assessment; and an Oracle 9i Data Guard disaster recovery solution. Dell maintains the customer relationship.
- Dell will sell low-cost clusters preconfigured with Red Hat Linux and Microsoft Windows. These are bundled solutions, effectively lowering the deployment time for a standard commercial platform. The new products should appeal to small businesses, large enterprises, and application service providers — plus labor-conscious systems integrators and value-added resellers. An entry configuration costs $18,000 and includes two PowerEdge 2650 servers with Linux, a PowerVault 220S shared SCSI storage rack, cluster interconnect, and two years of Premier Enterprise Support Services — gold-level service.
- Oracle has certified certain Oracle 9i configurations running Red Hat Linux on PowerEdge servers, ensuring compatibility, reliability, availability, and serviceability. Oracle also is certifying Dell | EMC storage.
- Oracle 9i database and application server versions on Linux are being developed on Dell servers. And Oracle's labs are testing future Dell servers with new Infiniband technology, showing important gains in cluster availability and message latency, resulting in better scale-out performance.
Serving Up the Storage with Dell | EMC
In October 2001, Dell and EMC announced a five-year partnership to jointly address the enterprise storage market. This program has been going like gangbusters, resulting in petabytes of storage bought by Dell's 2,500 new storage customers. Although the companies do not report a breakout, Aberdeen is on firm ground in saying that the relationship with Dell has had the fastest ramp in EMC's history.
The Dell | EMC CX200, CX400, and CX600 RAID arrays are aimed at entry-level, midrange-with-growth, and high-end data-center storage requirements, respectively. In addition, the two partners deliver a variety of services aimed at storage planning and management.
In March, the two companies jointly announced a new advanced technology attachment (ATA) enclosure, which allows the use of cost-effective ATA disks on a mix-and-match basis within a storage area network (SAN). Aberdeen believes that ATA disks, deployed as Dell and EMC are planning, represent a significant and cost-saving trend in storage management. In fact, Dell and EMC are early to market, offering customers a long technology lifecycle.
Last month saw the introduction of new versions of the ControlCenter Navisphere, MirrorView, and SnapView software. The new features are squarely aimed at enterprise-level storage management issues, including remote mirroring to support remote disaster recovery and business-continuity capabilities, improved data-center operational efficiencies, remote browser-based storage management, enhanced security, and enhancements to the high-end FC4700 SAN.
Dell announced today that it will begin manufacturing the CX200 RAID storage system in the U.S., Ireland, and Malaysia. Dell, of course, is a recognized leader in supply chain management and low-cost manufacturing. The announcement means that the sales volumes of the partnership are big enough to benefit from Dell's assembly prowess. As a result, Aberdeen expects Dell and EMC customers to continue to benefit from exceptional values in CX200 systems.
Other Key Partners: Intel and Microsoft
The proof that Dell and its partners, EMC and Oracle, are delivering more for its customers is in the announcement pudding, sketched out above. However, there are two other partners that are critical to Dell's overall success, now and in the future: Intel and Microsoft.
What makes Dell fundamentally different from its chief rivals, Hewlett-Packard, IBM, and Sun Microsystems, is the fact that Dell has "Intel inside" all its servers and clients. Dell benefits enormously from Intel's huge R&D and relentless push to better, faster, less expensive, smaller microprocessors. Dell's rivals have to spread R&D over smaller volumes (Sun) and/or duplicate efforts on multiple platforms (HP and IBM). Intel's Xeon processors deliver competitive and sometimes leading performance compared with the competition, but at such substantially lower prices that the dynamics of the server business have changed, favoring Dell. And because the burgeoning Linux phenomenon is 95% on Intel 32-bit microprocessors, Dell's Linux efforts are well matched to customers' demands.
Microsoft has also been on a roll in the server space on the back of Windows 2000, Exchange, and a growing variety of special-purpose servers, such as BizTalk. The next generation of Microsoft server software will start rolling out later this month, starting with Windows Server 2003.
The Microsoft bottom line: Windows Server 2003 and Exchange 2003 are much improved in reliability, availability, serviceability, security, scalability, and performance -- the key selling points of proprietary Unix systems. Dell servers running Microsoft operating software will be even more competitive against Unix systems going forward. In a study Aberdeen completed a year ago, the total cost of ownership (TCO) advantages of Intel servers running Windows 2000 versus Unix servers were 46% overall and 70% for two-way servers. That is right in Dell's sweet spot.
Aberdeen Group Observations and Conclusions
With well-respected partners such as EMC, Intel, Microsoft, Oracle, and Red Hat, Dell is at the spearhead of a major market sea change toward standards-based computing -- not standards so much in the committee sense, but in the sense of major, well-understood, and trusted building blocks of information technology. Dell is a key player in an IT megatrend toward standards-based computing.
With TCO and quick return on investment (ROI) as two of the top IT management priorities, Dell's value proposition -- enhanced by its partnerships -- demands and gets customer attention. There is no sleight of hand done in evaluating the price/performance benefits of Dell's standards-based value proposition. It is an increasingly recognized fact. Therefore, Aberdeen expects Dell to gain market share in the online transaction processing, messaging, data warehouse, and file and print markets. These gains will increasingly occur in the enterprise data centers where competition is fiercest.
But Dell's market ascendance, Aberdeen's field research shows, is not just a "best price" phenomenon. Dell gets high marks for service and support, an increasing respect for technology innovation -- no more "Dell has no R&D" sneers from competitors -- and for a real commitment to customers that belies its telesales heritage. Dell has grown up. It is now the fourth most trusted company in the U.S., according to a recent Fortune survey. Trust is an invaluable intangible asset.
The announcement that Dell will manufacture Dell | EMC CX200 storage systems for its customers cements a key element of the Dell and EMC partnership. Aberdeen expects Dell customers to see quicker global order fulfillment and the next increment of Dell's supply chain magic, which should result in even better storage values over time.
The Oracle announcement is important for both companies, and it indicates how Linux will earn its data-center stripes through standards-based systems delivered by well-known IT companies -- such as Dell and Oracle. Certified Oracle 9i RAC on Linux really means "mission-critical transaction processing" applications on Linux, where clustering is the customary way of ensuring high availability. Another important aspect of this announcement is Dell and Oracle working together to provide the critical professional services.
Backed by the dozens of field interviews that Aberdeen has done with Dell customers over the past year, Aberdeen's conclusion is that Dell continues reinforcing its reputation as a trusted IT supplier. The announcements add another argument in Dell's long-term favor, and they suggest a likely continued success in executing the company's strategy.
Peter Kastner leads hardware platforms, pervasive computing, and semiconductors research for Aberdeen Group, a Boston-based IT market research and consulting firm.
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© 2003 Aberdeen Group Inc.