September 5, 2001 1:00 AM PDT
Dell enters networking fray with new devices
Dell on Wednesday is officially jumping into the networking market with the release of four low-end networking devices that connect PCs and servers together in small and midsized businesses.
The PC maker two months ago announced plans to break into the network-equipment market that focuses on small and midsized businesses. The $5 billion-a-year market includes entrenched networking players such as 3Com and Nortel Networks spinoff Netgear, as well as Intel, Hewlett-Packard, Linksys and D-Link. Dell is also battling Cisco Systems, although the networking giant focuses mostly on higher-end equipment.
Dell's goal is to persuade its small and medium-sized business customers that buy PCs to also purchase low-end "switches," devices that allow office PCs and servers to connect and that can swap data.
Analysts say Dell has a good shot at succeeding in the market because its new family of products is priced much lower than its competition's. Gartner analysts, for example, have predicted that Dell will capture as much as 10 percent of the low-end switch market by 2002.
"I think they will take significant share in that market," IDC analyst Paul Strauss said. "They will mainly compete on price. Their competitors will lower their prices to match Dell's price, but Dell can respond accordingly and continue to keep its price (lower)."
Dell has historically succeeded in eking out profits by using a cheaper manufacturing process, in which it won't build products until they are ordered and will sell products directly to customers through its Web site. For its family of "PowerConnect" low-end switches, however, Dell has hired a Taiwanese manufacturer to build the products.
Dell's four new PowerConnect products can support between 10 and 24 connections and support Ethernet-based connections that run at either 10 megabits, 100 megabits or 1 gigabit per second.