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Dell directs focus on enterprise

The direct vendor outlines new service and hardware offerings it hopes will propel it into the market for high-end computing systems.

Hoping to maintain its torrid pace of growth, Dell Computer outlined new service and hardware offerings it said will propel the company into the $24 billion market for high-end computing systems.

The direct PC vendor introduced new service programs for corporate and government customers--programs that are required to install, link, and maintain complex networks of servers and storage systems.

The Round Rock, Texas, company also rolled out its first line of storage systems for maintaining large "warehouses" of information and pitched servers and workstations based on the recently introduced Xeon chip and Windows NT as a lower-cost alternative to Unix-based systems.

With a bit of hyperbole, chairman and CEO Michael Dell said during a press and analysts' briefing that "IT decision makers will rapidly see they have been overcharged...We are shining the light on crimes committed in the past."

Dell's refinements to its service program strategy feature three new service programs to give greater levels of support for businesses and government agencies with complex computer systems. The initiatives center around its recent alliances with Wang Global and Unisys.

Morgan Gerhart, an industry analyst with Meta Group, said the new offerings should close the gap on some of the performance issues that have kept Dell from competing at the high end of the corporate computer market.

Not only that, but the additional services could help Dell maintain the 50 percent growth in revenue the company enjoyed in the first fiscal quarter. In recent years, profits from services have grown strongly for rival computer vendors such as IBM, but Dell has missed out on the boomlet. Service offerings will become increasingly important as profit margins on products like PCs shrink.

The new storage server line, the first result of Dell's alliance with storage maker Data General, will allow the PC maker to compete at the high end of the business computer market, where many customers require products from the same vendor to be connected together and serviced by the same company. A vendor without a complete product line often cannot sell the most profitable systems into these corporate accounts.

The new products promise not only to make Dell more competitive with IBM, Hewlett-Packard, and Sun Microsystems but also to pit Dell against companies specializing in corporate data storage such as EMC and Storage Technology Corporation.

The new PowerVault line of enterprise storage products, Dell's first entry into the $3.2 billion market for high-volume Windows NT storage servers, is expected to start shipping in July, with general availability anticipated in September. Prices for the PowerVault storage line begin at $15,000 and range to more than $100,000 for fully configured systems, according to Dell.

Dell's entry into the data storage business is also crucial to its corporate PC sales growth strategy, Meta's Gerhart said.

By failing to offer storage products, Dell allowed rival server makers with such products to grab high-margin dollars to subsidize their other product lines against Dell's low-price, direct distribution model, Gerhart said.

Reuters contributed to this report.