Dell to resell Cisco networking gear 28 January, 2009 By Paul Weinberg

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"This is a strategic direction for both companies to give our customers the building blocks for a unified fabric environment in the data center. Deploying a fully compatible Cisco and Dell data center solution provides the customer flexibility within the data center. The relationship compliments Dell's data center capabilities with Dell PowerEdge. Today's IT professionals can integrate Dell's PowerEdge servers and Dell , PowerVault, Dell EqualLogic and Dell/ EMC storage platforms, using Cisco networking as a full solution," stated Matt McGinnis, Dell Global Communications, commercial products.

Whether this announcement represents another chapter in Dell's effort to renew itself in a post direct selling PC phase is open to debate within the industry.

One industry analyst, Bill Moran, a research director at Ptak, Noel & Associates, noted that Dell, in addition to being hurt along with its competitors by the slowdown in desktop and notebook sales (with the exception of netbooks), is also suffering from "a floundering" at the helm with the departure of two senior executives after only two years on the job. They had been viewed as not moving fast enough in consolidating and outsourcing Dell's overseas manufacturing faculties, he said.

Dell's initial strength came about in its inception when founder Michael Dell took the direct sales model and built a very successful computing hardware business.

But Moran questioned whether Michael Dell's entrepreneurial skills adequately match what his company needs now, since it has found it necessary to move away from a direct sales approach, entered the channel and broadened product lines with the acquisition of EqualLogic to boost a presence in storage.

"[Michael Dell] is reorganizing and he doesn't seem to have the skill to get the right people into the right job. If you can't do that in a large organization you are really in trouble."

Moran indicated he has positive impressions about the Dell/Cisco deal but he also noted that that Cisco is coming out with its own server that will be competing with similar hardware products from other vendors including Dell.

"It solves customers' problems, but it doesn't really solve the overriding business problems that Dell has."

Charles King, principal analyst at PundIT thinks that this is a scenario where the two vendors are both co-operating and competing -- and Dell already has a large server footprint in data centers along with racks of other vendor servers.

"If the businesses are happy with the Dell server products and storage products they are already using, what would be the benefit or impetus that would drive them to embrace servers from Cisco?"

Nonetheless, King observed, Cisco is offering a simplified network fabric which can be adopted by any server vendor. It essentially pools storage, computing and networking resources together and demands less cabling and complex connectivity modules, he stated.

For Denise Sangster, president of Global Touch, Dell is technically the odd person out as the major players in data center solutions market duke it out for enterprise customers -- the latter looking to curtail IT costs with virtualizaton.

"This is not really about Dell, but about the escalating battle between Cisco and HP, which are heading into battle over the data center. Each one is trying to create an end-to-end data center offering. Cisco has been the leader on the networking side of the data center and HP has been a leading provider of servers in the data center. Now, both are trying to be primary vendor for data center customer."

She argued that Dell's lack of technical innovation and its primary strengths in marketing and reacting to business opportunities which have propelled it in the past are not sufficient for the company amidst the current economic climate. "In the last two years [people have been asking] if Dell is going to be around [over the long haul]."

More optimistic about Dell's direction is John Spooner, an analyst at Technology Business Research. He suggested that Dell needs to expand its professional services arm which currently merely consists of hundreds of people.

"What Dell has on its side is that a lot of customers look at Dell as 'the bang for the buck' provider. They generally look at Dell's servers as being the most cost effective of the three -- Dell, HP and IBM."

Meanwhile, the Dell spokesperson described as "speculation" the media reports about Cisco's intention to enter the server market.

"We cannot comment on speculation. Dell continues to have a strategic networking partnership with Cisco, with plans to expand the offerings in the future. Cisco and Dell view each other as valuable partners and agree that a unified fabric approach to virtualization will benefit our partners both short term and long term in the data center," stated Matt McGinnis.