Dell moves into enterprise networking

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

The move follows Dell’s migration from PCs into servers, and Kim Crawford, the company’s networking division vice president, made it clear Dell plans to drive deeply into networking hardware with Layer 3 routers, 10-Gigabit Ethernet and possibly even chassis switches in the not-too-distant future.

“We’re just applying our model to something new,” Crawford said.

Analysts say that decision could mean lower prices for users. Dell’s first two offerings, a 1U (1.75 in.) Fast Ethernet switch with 48 ports with two Gigabit Ethernet uplinks, and 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.

He said that Dell’s supply chain execution would likely mean that it could undersell its main 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.

Already, Dell has 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.

Smolek said Dell will likely make early gains in the small-to-medium enterprise market but could eventually emerge as a serious threat to networking market leader Cisco Systems Inc. “Dell executes very well, and they have the ability to change the model for the market,” he said.

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