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Dell rolls out new low-end server

The computer maker is trying to surge ahead in the market by luring customers with the new server and more support options.

Dell Computer, neck-and-neck with Compaq in the small business market, is trying to surge ahead by luring customers with a new low-end server and the option to have Dell handle the installation of networks.

Under a program announced today, the Round Rock, Texas, computer company will install a network for businesses that buy one of its servers, said David Clifton, senior marketing manager for Dell's small business division. The option covers network interface cards, cabling, routers, and other network equipment.

For $299, Dell will send personnel to case the joint, figure out what's needed, and come up with an estimate for the installation costs. Although technicians from Wang Global will do the on-site work, Dell will handle billing and support, Clifton said.

The new option is part of Dell's effort to differentiate its products in a world where buyers often have a hard time telling the difference between products from different companies, said Roger Kay, an analyst with International Data Corporation.

"Given that hardware is so commodity-like, there's not a lot of opportunity for hardware vendors to distinguish themselves, so they surround [their products] with a pack of software and services to distinguish themselves from their competitors," he said.

With the market saturated for large corporations, computer vendors have a hard time trying to make money off increasingly competitive bids for equipment upgrades, Kay said. But in the small businesses market, "there are still some mineable veins," Kay said, so it's reasonable for Dell to focus its attention there.

Dell is neck-and-neck with Compaq Computer in the small business market, with each company having a bit more than 13 percent of the market, Kay said.

Dell, which has made a habit out of surging from the middle ranks of computer vendors to threaten the market leaders, sees opportunity in the small business area, Clifton said.

"We're seeing the networked business community grow by leaps and bounds. We feel there's a lot of headroom in this marketplace," Clifton said.

The new PowerEdge 1300, meanwhile, will help better address the small business customer base, said Subo Guha, senior manager of Dell's server product marketing division.

The PowerEdge is essentially a low-cost, scaled-down version of the Power Edge 2300, according to Guha. The new server is capable of running up to two 450-MHz Intel Pentium II processors and holding between 32MB and 1GB of memory. The 1300, however, only comes in the desk-side design and cannot be linked into server clusters. The 1300 also does not come with hot-plug capabilities.

Where the 1300 differs from competitors' servers in this price range, he asserted, is the fact that it is not a workstation. A number of vendors merely repackage low-end workstations as servers to hit the $2,000 and below level, he asserted. As a result, some of these are not capable of running two processors or holding gobs of memory.

Dell is also apparently planning to be aggressive in pricing the server. A week before the announcement, the system was slated to sell at $1,799. The company, however, released it at $1,699. Similarly priced servers from competitors, Guha added, do not permit dual processing.

While small business will be the target market at home, demand is also expected to be strong in emerging markets where IT budgets tend to be tighter. "China, Asia/Pacific, and Latin America are key areas for the server market," Guha said.

The network installation option has a 30-day installation guarantee, Clifton said.

Small businesses usually choose local computer shops to handle network installation, Kay said, more often than not selling a generic "white box" computer they've assembled to go along with the product.

But Hewlett-Packard is now reaching out into that space, adding a program to let those resellers sell HP machines for about the same cost as the generic machines, Kay said.

Dell's view, though, is to simply bypass the local shops altogether, Kay said.