Network servers based on Intel chips and running the Windows operating system used to be less popular than Unix-based options. But PC-based servers are now big business, thanks to a combination of power, reliability and good price/performance.
Anyone who buys PC servers for a living will know that there are now many suppliers clamouring for their custom.
Dell and Compaq are currently conducting an increasingly public duel for user affections, representing a direct versus channel sales fight.
In the US, this competition has taken a whole new turn. Compaq, which has been stung by user defections to Dell, with its streamlined sales model and in-house support, has set up an initiative called Dell Win Back.
As the name implies, this scheme hits on large corporate customers that have recently jumped ship, and tries to woo them back with hard-sell tactics. Apparently it has been quite successful.
While there is no equivalent to Dell Win Back in the UK yet, no-one should be in any doubt that a comparable battle is raging. According to market researcher Romtec, Compaq may have about 52 per cent of the PC server market by volume of sales in the UK, but Dell is catching up fast with 24 per cent. With IBM, the next-nearest vendor, holding eight per cent of the market, it is effectively a two-horse race.
Compaq predicts problems ahead
But with direct vendor Dell outselling Compaq in the desktop PC sector in the UK now, Compaq is worried that problems lie ahead in the server market.
Tony Harvey, Compaq's product manager for servers in the UK, understood the aggressive nature of the Dell US's Win Back initiative.
"While we have so specific a programme, the campaign in the US is just good business practice. If you lose a customer, you want to find out what you did wrong, so you can take the information and fix it," he said.
He denied that Dell represents any particular threat to Compaq with regard to its UK customers. "Dell is serious competition, but our market share is holding up, so Dell must be growing at the expense of other manufacturers," he said. Harvey added that Dell's direct sales model is designed with the desktop PC in mind, and claimed that most business buyers prefer to buy servers from a technically skilled reseller.
Andy Barraclough, Dell UK's enterprise systems marketing manager, said: "It's flattering that Compaq should be targeting us in this way. We don't feel we need a gimmicky programme to go after competitors. You can't just go into an account you've lost, offer a cheaper price to win it back, and walk away. Servers aren't like that. It's more about service and support."
But users are not interested in watching the two giants slug it out. They want to know which supplier and which service and support offer represent the best value. Is Dell catching up so quickly because on some level it is offering a better deal? Or are there good reasons for Compaq server customers to remain loyal, whatever the alternatives?
Analysing Dell's success
Thomas Meyer, senior analyst for systems and servers at IDC, has researched and identified the most important elements of Dell's success. He has some views on why that success might prove limited in the upper echelons of the server market. "For the time being, Dell's success remains based on its business model - the company's efficiency of resource planning, limited inventory, build and configure-to-order model, as well as its telephone- and web-based services," said Meyer.
He believes that Dell has also been clever at focusing sales drives in specific market sectors, and in managing a relatively consistent implementation of its business model on a global scale.
At the same time, Meyer said that this model has restricted the direct vendor from moving further up the enterprise into a more mission-critical server space. He said it has also limited the value added to these products, even though additional functionality or services would appeal to prospective buyers.
The manufacturer is great at efficiently knocking out reliable products at a reasonable price, and supporting them mainly through call centres and the internet, with only a small degree of reliance on a limited network of third parties.
However, where Compaq outshines its rival is where higher-level servers are given tougher tasks to do and where a different class of knowledge and experience is required for success. This is is likely to be better provided by an authorised reseller partner of Compaq (or IBM or Hewlett Packard). The Dell model drives all before it for a certain kind of solution, but then meets a glass ceiling.
As long as server customers bear important considerations and distinctions like this in mind, they will have nothing more to worry about than a friendly visit from Compaq's customer care commandos.
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