February 20, 2004 9:24 AM PST

Dell designing lower-priced storage

Dell is aiming to cut the price of storage-area networks so it can better reach smaller companies and emerging markets.

The Round Rock, Texas-based PC maker is designing a new storage-area network (SAN) that will start at a lower price than its existing entry-level SAN, the Dell EMC CX300, a company executive revealed on Friday.

Dell will target the new product, due later this year, at small and medium-size businesses and emerging markets such as Asia--areas that its existing Dell-EMC SAN products do not fully serve, said Russ Holt, vice president of enterprise engineering at Dell, speaking at a conference call for analysts.

The company is working on a "sub-entry platform that will continue to drive cost out of entry-level SAN configurations," Holt said. "Aligning with that platform will be the delivery of a low-cost HBA (host bus adapter) solution and a (low-cost) switch solution" allowing Dell to offer a complete storage system at a lower price than it has before.

Storage systems have become a major focus for Dell. Those products, along with servers and professional services, make up the core of a bundle of offerings the company sells to businesses. They are also at the heart of its overall effort to grow in size and revenue and to reach $60 billion in annual revenue over the next few years.

The low-price entry would serve to expand Dell's presence in the SAN market, in a classic maneuver for the company.

Dell typically enters new markets--or profit pools as it calls them internally--with the intent to turn the products that are sold there into commodities. It does so by using its business and manufacturing practices to offer lower prices than competitors. Because Dell can still turn a profit at the lower prices, it aims to simultaneously drive the market's prices down and rapidly increase its unit shipments. This allows it to win customers and market share, even against established competitors.

Dell has won market share recently using this approach in markets such as network switches. It also recently said it would expand its efforts in the printer market, which it entered in March 2003.

Dell often works with a partner or several partners when entering a new market. It has been working with storage systems maker EMC for more than two years. Dell also manufactures the Dell EMC CX300 systems it sells.

Holt did not say whether Dell was developing the new product along with EMC and did not reveal any details on the product. He did say he believes the new product will add to Dell's SAN sales.

 

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