I feel sorry for Dell. Not just Michael Dell, but the whole lot of them. I never thought I’d say this, but it is difficult not to have that reaction when you see the relentless hammering that Dell is getting in the financial and business press of late.
In case you missed it, Dell disappointed Wall Street in May, and it soon seemed everyone was piling it on and reciting a litany of Dell woes. Some analysts called it the end of an era, and many focused on where Dell went wrong.
The analyst attacks had two targets: the core business of selling PCs and servers, and the ancillary businesses that include printers, storage and networking.
Not only is Dell’s classically successful model not working up to expectations in key geographies such as Asia, but the company also hasn’t been able to transfer the “Dell way” outside the PC market to achieve notable success in its ancillary markets, according to many observers. This troubles analysts because future growth was to come through continued success in the core business combined with success in the new markets.
Although I have no personal knowledge of the other ancillary businesses, I’ve been observing Dell’s LAN switch activities since the first switches hit the market in 2001.
It is clear that Dell has failed to meet its own expectations with respect to sales, but it is hard for me to come up with anything that the company did wrong with respect to its switch products.
It would appear that Dell’s past and current strategy is to match or exceed the functionality and performance of the equivalent Cisco products and at a fraction of the price. And the company accomplished what it set out to do.
Over the years, we’ve benchmarked and certified a number of Dell switches, with wire speed the norm and always exceeding expectations when it came to feature set. And the company delivered this with per-port prices that were usually the lowest around.
From a technology viewpoint, Dell entered this market taking the specify-and-assemble approach that it took with PCs. The switch innards were typically made to Dell’s specifications by Broadcom or Marvell. This is the path many vendors take with switches these days.
The economics were incontestable. Any evaluation comparing features and performance and weighing cost as a factor had Dell a clear winner; one cost comparison that The Tolly Group prepared some years back determined that the Dell switch – including service – cost less than the three-year service contract alone on a comparable Cisco switch. Can’t beat the price.
But the fact remains that not enough users moved from Cisco to Dell. Why?
My educated guess is that the low-end users didn’t care what they plugged into and didn’t need the advanced features or the wire-speed throughput that Dell offered.
At the higher end, network architects probably wanted a product suite that included WAN routers, firewall and VPN devices, and so forth, not to mention the most important element – higher-end, chassis-based switches.
For these folks, Dell offered a product when what they needed was a multidimensional solution, which was never in the cards from Dell.
