Dell becomes an infrastructure provider

As technology vendors go, Dell has been holding its own in the market downturn. Sure, Dell's lowered earnings estimates (so who hasn't?) and undergone massive cost cutting exercises, but it's demonstrated an ability to make those revised estimates and cut costs without affecting development/sales cycles. That's not something other vendors can claim.

Dell's strategy is a basic one: Enter a particular market as the low-cost vendor, sell directly to buyers and then move up the food chain into higher-profit areas. Dell's recently announced move into the server and storage markets is a good example of this strategy at work.

Now Dell's announced plans to move into the small to mid-sized LAN switching market. Will this prove to be a good move for them, given that the market is already commoditized and dominated by vendors like Cisco, 3Com and HP? I believe it will, especially if Dell can bring the same "price war" mentality to this sector as it has in other efforts.

But don't look for anything beyond good pricing from Dell. The company's model doesn't include innovation. Then again, it doesn't have to. LAN switches today are what 10BaseT hubs were five years ago - a basic commodity that usually just has to be plugged in to work.

Still, it moves Dell closer to being the complete infrastructure vendor smaller to mid-sized shops are looking for. These days, it's rare to spend big bucks on PCs and servers without also laying out some money for overall network expansion. Especially in an economic downturn, having a single, low-cost source is very attractive to many network professionals.

So if you are in the market for to equip those remote sites with new desktop, server and networking gear, Dell is definitely worth a look.