Network Computing is part of the Informa Tech Division of Informa PLC

This site is operated by a business or businesses owned by Informa PLC and all copyright resides with them. Informa PLC's registered office is 5 Howick Place, London SW1P 1WG. Registered in England and Wales. Number 8860726.

Dell Revamps Blade-Server Strategy

On a sunny, breezy spring day in Austin, Texas, Dell painted a rosy picture of a company that's expanding its market share, cutting costs, and staying ahead of target on its long-term revenue goals. Dell has tripled in size since 1997 and continues to aggressively buy back its stock using large cash reserves. Still, the company faces its share of challenges in the coming years as it works through some customer-support problems and revamps a blade-server strategy that got out of the gates quickly but soon fell behind those of rivals Hewlett-Packard and IBM.

At an analyst conference Thursday, chairman and CEO Michael Dell said his company is renewing its efforts in the blade-server market and that within the next several quarters Dell will deliver a new generation of blade servers with standardized components that will make today's blades obsolete. "There are not enough industry-standard components for this next generation of blades yet," he added.

The new standards Dell is banking on will come in the areas of system-management software, cooler-running processors, and a backplane that uses a PCI Express bus to attach blades regardless of vendor. "Today's blade servers are suboptimal in that regard," Dell said.

Not everyone is sold on Dell's ability to pull off this next generation of blades anytime soon. The company's timetable is too aggressive, given the lack of standards needed to realize its vision and its inability to develop a blade that runs on anything other than an Intel Pentium chip, says Mark Stahlman, managing director of equity research for Caris & Co. "Dell's selling Pentium blades, but people want Xeon blades," he says. Stahlman contends that Dell isn't investing enough in R&D to successfully accommodate the heat and power requirements of more powerful chips--a problem that likely will be exacerbated by the market's eventual embrace of 64-bit Intel-based processors.

But Dell's quiet presence in the blade-server market isn't to be overlooked. "Dell has to do something in the blade market because it's part of selling into the larger enterprise," Stahlman says. One strategy would be for Dell to expand its blade lineup to include Advanced Micro Devices Inc.'s 64-bit compatible Opteron-based servers. That way, companies would have a 64-bit migration path, even if they're running only 32-bit apps today.

  • 1