[CS-FSLUG] NI: DELL BETS ON LINUX TO CAPTURE ENTERPRISE MARKET

[Fred A. Miller]

DELL BETS ON LINUX TO CAPTURE ENTERPRISE MARKET


By Neil McAllister

Posted September 26, 4:00 a.m. Pacific Time

In the Wintel-systems market, Dell is king of the hill. But what do you
do when your hill just isn't big enough?

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"To some extent, Dell is seen as more of an SMB kind of player," says
Judy Chavis, director of business development for the enterprise
products group at Dell.

If Dell is to continue to grow, making inroads into the enterprise market
is essential. Chavis wants the world to know that her group is doing
just that, with the help of an unlikely ally: Linux.

I spoke with Chavis about Dell's enterprise strategy at last week's
Oracle OpenWorld conference, and she couldn't have picked a more
appropriate forum. The event, which this year filled all three buildings
of San Francisco's Moscone Center, drew an estimated 39,000 business and
IT professionals from all parts of the globe -- a fact that made Dell
pleased as punch.

"If you go back and check with Oracle, we are their No. 1 reseller
globally," Chavis says. "We've seen the revenue year on year literally
double."

Beyond just bringing in revenue from software sales, however, Dell's
partnership with Oracle is strategic for another reason: It creates the
perfect opportunity for Dell to gain a toehold in the enterprise --
something it's never been able to manage before.

Unlike Apple Computer or Sun Microsystems, Dell has never tried to market
its own operating system for its hardware. In the company's humble
beginnings as a mail-order discount PC vendor, licensing Windows -- far
and away the desktop OS leader -- was a no-brainer. Later, when
Microsoft built a server platform around Windows, Dell went along for
the ride. The result was a healthy business selling PowerEdge servers to
the SMB market.

Still, the enterprise market remains elusive for Dell, and the problem is
more than just perception. Chavis never uses the words "commodity
hardware" to describe Dell products. She prefers the term
"industry-standard servers." But to enterprise IT departments, where
proprietary Unix boxes from the likes of Hewlett-Packard, IBM, and Sun
handle the heavy lifting, it's six of one and half a dozen of the other.
If x86 hardware can't handle your workload, it doesn't matter who's
trying to sell it to you.

That's why, when Oracle began to view Linux as a viable alternative to
Unix platforms, Dell jumped on the opportunity.

"I call it 'degrees of separation,' " Chavis says. "When you look at
customers, they're running big boxes, Unix servers. You're asking them
to move to a different [hardware] platform, and you tell them to also
move their whole entire infrastructure to another operating system. It's
easier for them to move to Linux than, say, one more move to Windows."

But the OS alone isn't enough. What makes the Oracle partnership
particularly attractive to Dell is Oracle's RAC (Real Application
Clusters) software, which delivers enterprise-grade scalability in a way
that's a perfect match for the hardware vendor. Rather than scaling up,
RAC encourages you to scale out. In other words, instead of buying a
bigger box, you simply add more small ones -- music to the ears of
Dell's sales force.

And this force has been selling. Last year Dell shipped more Linux
servers in the United States and Japan than any other vendor. At
OpenWorld it announced that it's taken the No. 1 spot worldwide, as
well, displacing rival HP.

It may seem ironic that a free OS could become such an important profit
driver for a company the size of Dell, but Chavis takes it in stride.
Asked where Linux will take Dell next, her answer is simple: "All the
way up the food chain."

Neil McAllister is a senior editor at InfoWorld.

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