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Commentary: Dell aims Web hosting at small, midsize enterprises

The company is being aggressive in its Web-hosting business strategy for several reasons.

See news story: Dell Web hosting services focus on price, brand

By Audrey Apfel

Dell Computer is being aggressive in its Web-hosting business strategy for several reasons.

First, Web hosting is a server-loving market. Good Web hosting sells more servers; thus, Dell can attempt to sell more of its own servers.

Second, these hosting announcements are dedicated to small and midsize enterprises that often would not be able to build this infrastructure themselves. Therefore, small and midsize businesses represent incremental new server revenue.

Third, hosting revenue is subscription-based and can be more predictable and reliable than hardware revenue. And finally, Dell's competitors--Compaq Computer, for example--are targeting this market as well.

Through 2001, Gartner believes that the demand for Web hosting will exceed the supply for such services. Therefore, many hosting providers can fill their data centers and offer long lists of customers.

At the end of the day, however, the server hardware platform is not the key decision criteria on a hosting contract, nor is there a need to go to the server hardware vendor for hosting. Basic hosting services are a commodity that will be driven by providers that can build large volumes of small and midsize business customers and offer low prices.

Gartner believes enterprises will value business services, design and technical assistance, price, and speed of release over a particular server hardware platform--hence Dell's attention to these aspects.

Dell's low prices, pre-configured servers and basic service-level agreements make its offerings competitive with those of many other hosting providers in the mass market serving small and midsize businesses. Enterprises considering the company's hosting services should do a detailed comparison of Dell offerings against other hosting providers targeting the same market.

Dell's advantages will be in its trusted brand, credible value-added services, and ability to intimately support its own products. However, these offerings are not aimed at, and should not be considered for, large enterprises or heavy business-to-business or transaction-oriented sites.

Entire contents, Copyright © 2000 Gartner Group, Inc. All rights reserved. The information contained herein represents Gartner's initial commentary and analysis and has been obtained from sources believed to be reliable. Positions taken are subject to change as more information becomes available and further analysis is undertaken. Gartner disclaims all warranties as to the accuracy, completeness or adequacy of the information. Gartner shall have no liability for errors, omissions or inadequacies in the information contained herein or for interpretations thereof.