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Dell Wards Off White Box Competition With Price Break

By Michael Chait (Send Email)
Posted Aug 26, 2002


Squaring off with the recently-merged HP/Compaq as well as so-called white box distributors, Dell Monday unveiled its new small business server, the PowerEdge 600SC, which carries a starting price point of below $600. Dell Monday unveiled the PowerEdge 600SC, its latest server designed for small business, that carries a starting price point of less than $600.

"Dell's chief competitor, outside of HP, is a lot of self-built and white box systems by local assemblers," said Mark Melenovsky, research manager for IDC. "[The price break] makes them much more competitive with this assembly market and white box phase. These kinds of companies have a much lower overhead than large system suppliers, even Dell."

According to Melenovsky, one of the challenges for Dell will be garnering backing from small businesses that enjoy the local proximity and associated support they can get from a local distributor.

The new release from Dell features DDR memory, integrated Gigabit Ethernet, and Intel Celeron processors. An upgrade of $200 will land a Pentium 4 processor, and an additional $400 will afford one of Dell's new PowerVault 100T-Travan40 tape drive.

The 600SC replaces the PowerEdge 500SC, and is designed for small- to midsize business customers who want to migrate from a desktop PC-based network to a true client-server architecture.

For those wanting a step up, the company also released its PowerEdge 2600, featuring Intel Xeon chips, Ultra320 SCSI drives, six 64-bit PCI-X expansion slots, and hot-plug redundant power and cooling. The 2600, which replaces the PowerEdge 2500, starts at $1,999.

Dell has a significant history with the small- to midsize business market, starting with the introduction of their SC product line in 2000.

"It's one of the things that really saved them in 2001," said Melenovsky. "While everyone else was really focused on the enterprise in 2000, Dell developed the small and medium business market, and when the enterprise spending fell away in 2001 they had a pretty strong product line."

The 600 SC will also battle it out with HP, recently merged with Compaq. Compaq retains its TC line, and HP has its ProLiant BML 320 and BML360 targeted at the small- and medium-sized business market.

"The ProLiant organization has a pretty strong network of channel partners that kind of act the role of these local assemblers, where they provide services and software integration," said Melenovsky.

The competition between HP and Dell has accelerated on all fronts. According to Melenovsky, IDC's Q2 report on the server market, due to be released later this week, shows a very close race for the U.S. front-runner between the two, with HP showing better than expected shipments.

In addition, IDC's projections for Q2 PC shipments showed Dell widening its lead in the U.S. over HP, whose market share fell 13.2 percent last quarter.

Dell Monday announced another coup over HP, revealing that it had landed a multi-million dollar account with Rackspace.

The company, which already has more than 6,000 servers under management, selected Dell hardware for its base of enterprise hosting customers after a comparison between Dell PowerEdge servers and Compaq/HP servers.

Terms of the agreement ensure Rackspace will receive early access to Dell technology as well as enterprise training and product support.

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