Dell Chief Affirms Commitments to Intel, Blades, And Global Sourcing

Dell CEO Kevin Rollins had a number of things on his mind Tuesday as he addressed public-sector IT users and managers at the FOSE 2005 conference in Washington, D.C. Topics during his Q&A-style keynote ranged from the company's relationship with Intel to the impact of shrinking technology components on the data center to the company's perspective on call-center outsourcing.

Intel will play an important role in Dell's quest to deliver increasingly compact servers. "As we increase density, power, and performance, there is an increase in heat generated," Rollins said. One solution is Intel's multicore chip development. "Multicore processor technology will allow us to mitigate the heat generated by systems," he added.

Such capabilities should help further Dell's strategy to sell more blade servers, which aroused doubts soon after hitting the market a few years ago over whether data centers were equipped to cool components working in such close proximity. Blade servers have grown in popularity, although it's been a slow process. Revenue from blade servers totaled $1.2 billion in 2004, slightly more than expected, due in part to higher average selling prices as users have aggressively deployed more two- and four-processor blades than had been expected.

Intel's multicore processor design is at the heart of Dell's proposed solution to problems caused by increasingly dense servers. Intel president and chief operating officer Paul Otellini expressed similar sentiments earlier in the day at FOSE. The presence of multiple cores on a single chip will help answer the demand for PCs and servers than can simultaneously process multiple workloads, he said. Intel plans to deliver in May its first dual-core chip for desktops. This puts the ball in the hands of Dell and other hardware makers.

Rollins renewed his company's promise to work with Intel, despite a brief flirtation with Intel rival Advanced Micro Devices Inc. "We saw Intel lagging a few months ago and expressed interest in AMD," Rollins said. "Since that time, Intel has really stepped up to the plate." Now Rollins says it's not in Dell's interest to partner with AMD.Outsourcing proved to be a source of concern as well among FOSE's attendees. Rollins said Dell doesn't outsource its call centers, although the company does operate call centers staffed by Dell employees outside the United States that serve U.S. customers. Dell disclosed in late March that it will open a new customer-support center in India, its third in that country. The company plans to hire 1,500 people in the Indian city of Mohali during the next 12 months.

When asked, Rollins said he wasn't worried about competition from IBM's proposed $1.25 billion sale of its PC business to China's Lenovo Group Ltd. Dell will continue to use North American factories to build PCs for its North American customers while leveraging its presence in Asia to sell to customers there. Dell does as well or better in China, selling to the local market, as its competitors do, he added.

Separate from Rollins' keynote, Dell made a move Tuesday to strengthen its relationship with federal-government customers. The company, which is the largest technology provider on the government's General Services Administration schedule, added or formalized relationships with 10 small businesses, some woman- and minority-owned, that specialize in selling technology and services to the government. These providers include AVR Enterprises, Blue Tech, and Worldwide Technologies.

Part of Dell's strategy, says Troy West, VP of Dell's federal business, is to help federal agencies spend IT dollars earmarked for smaller technology providers.