Dell Aims Low to Battle Cisco in Data Centers
The IT industry may be on the verge of the commoditized data center age – and Dell may be the vendor leading the charge, according to some analysis.
New speculation is that Dell is planning to go head-to-head in the data center, now that it’s armed with routing and switching gear acquired from Force 10 Networks. The battle plan is simple: Attack with low-cost servers and mop up with low-cost networking and storage.
This idea was advanced by Business Insider, which was playing off a blog post comment made by Bruce Hedlund, former Cisco data center engineer turned Dell technical sales specialist. What Hedlund said isn’t that Dell will undercut pricing, but rather Dell has a more complete portfolio than Cisco, Hewlett-Packard, Juniper Networks and Brocade to meet customer needs.
Now, if that complete Dell solution also comes at a lower price, the theory goes that it will result in more customer wins.
Perhaps this is Dell’s strategy for jump-starting its data center business. But it’s hardly alone.
HP just two weeks ago announced new changes to its PartnerOne and EliteOne channel programs to incent more networking equipment sales. HP has already posted some impressive gains in selling core switching and routing equipment, and much of that gain has come as server sales drag network solutions into the equation. The combined solution not only produces a higher deal yield, but enables a more complete and manageable solution for the end user.
Cisco isn’t unable to compete in holistic architecture and attached sales. Its Unified Computing System architecture, based on virtualized servers, is the cornerstone of its effort to play in all aspects of the data center. For areas in which it can’t compete, it partners with other leading vendors – such as EMC and NetApp, and VMware for virtualization. VCE, the joint venture with EMC and VMware with support from CA Technologies, is designed to provide a multi-vendor solution that ends with holistic data center infrastructure.
The issue isn’t which vendor can offer attached sales. All leading networking, server and storage vendors have the ability to cobble together the components for a complete data center. The issues are cost and integration. Relationships, such as that forged by Cisco and NetApp for their FlexPod architecture, provide an integrated data center solution. But the integration of unrelated components not only drives up component costs, but the cost to solution providers.
Solution providers that can participate in these heterogeneous alliances are often required to maintain relationships with each vendor that’s contributing technology, be certified in each vendor’s technology, engage with multiple distributors and manage each relationship independently. The cost of participation is high, even if the rewards are equally high.
And this is where things get complicated: If one vendor can not only drop into an opportunity with a holistic, one-brand solution, they can compete on ease of integration, management and cost. This means some solution providers will be at a cost disadvantage as they won’t have the partnership tax that comes with multi-vendor solutions.
Setting aside the partnership and channel compliance issues, a price war doesn’t work well for solution providers. Vendors have a greater ability to absorb price cuts than solution providers who are already operating on razor-thin margins. Vendors will say professional services make up for lost profitability in product sales. Unfortunately, price wars often prompt vendors to take more product and service deals direct to maintain their own revenue and profits.
Will any of this come to pass? It’s uncertain. The consequences are real, as channel history has shown. Each of these vendors has demonstrated a willingness to compromise partners in competitive markets. Solution providers will have to monitor the strategies of networking, server and storage vendors, and make adjustments to protect their interest as the data center market consolidates and commoditizes.
Leave a Reply
![]() |







