April 28, 2004 7:02 AM PDT

Dell sees billions in expanded SAP deal

Dell means business when it comes to server software.

The PC maker has expanded its long-standing partnership with SAP by adding new professional services and tech support offerings for the companies' joint customers. Even though they already share about 5,000 customers and three centers designed to assist them, Dell and SAP see the opportunity to expand their respective businesses.

"We believe and expect that over the next two years?we can more than triple our share of the market for SAP installations, growing it to more than a billion-dollar market for Dell," Dell CEO Michael Dell said Wednesday.

Dell and SAP's chief executive, Henning Kagermann, spoke at a Dell business strategy update on Wednesday in New York. They said the PC maker's expanded suite of professional services will help companies that use SAP software plan and make transitions from Unix servers to Dell servers running the Linux operating system or Microsoft's Windows. The services are also intended to let those customers switch between different databases as well. In addition, Dell becomes the first point of contact for joint Dell-SAP customers who need technical support for problems related to running SAP software on Dell servers, under the companies' expanded agreement.

By offering a service that makes it easier for companies to move to Dell servers running Linux or Windows, Dell believes it can expand that base and gain a large share of the market for SAP servers. The agreement offers SAP the ability to tap new customers, increasing its potential to sell more software licenses.

For its part, Dell has been putting more emphasis on server software and related services in an efforts to expand its presence in the corporate computer market. During a similar event last year, the Round Rock, Texas, PC maker announced a relationship with software maker Oracle, under which it offered Oracle's software.

Dell has long focused on servers and closely related storage systems and services as avenues for winning business from large companies. Such moves are designed to help Dell advance toward its goal of $60 billion revenue.

Despite being the world's top PC maker, Dell has trailed rival Hewlett-Packard in worldwide server unit shipments and in server revenue.

Fostering closer relationships with companies such as SAP and Oracle is designed help Dell differentiate its servers from competitors and help it to attract new customers, the company has said.

Earlier this month, Dell and Oracle announced an expanded pact that makes Dell the only server maker that can bundle Oracle Standard Edition One database software with its servers.

Although Dell is not considered to be a services powerhouse like organizations such as IBM Global Services, the company has been putting more emphasis on services of late as well.

Dell, which offers a broad menu of fixed-priced services, focuses on using repeatable procedures to lower the cost of many information technology projects. For instance, it has cut the cost of installing a storage area network (SAN) by about half over the last three years, Dell said. In 2001, rolling out a SAN cost about $18,000. Now, it costs about $9,000 to roll one out using Dell's services, which have also cut deployment times from several days to about two days, he said.

The company, which also touched on its server and storage businesses during the New York event, plans soon to introduce a new low-price SAN product, stemming from its partnership with EMC, Dell said.

 

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