Enterprise

Last week, we achieved yet another milestone in enterprise computing with the launch of our latest enterprise solutions - including our 11th generation PowerEdge servers, a new EqualLogic storage product, and new systems management capabilities. These offerings are specifically designed to help our customers become more efficient and maximize their return on investment in data centers. As part of this launch, we introduced 14 new enterprise products that help customers cut cost and complexity through simplified management, industry leading virtualization and innovative solutions. Two members of our executive leadership team, Steve Schuckenbrock, President, Large Enterprise, and Brad Anderson, Senior Vice President, Enterprise Product Group presented at the launch event in San Francisco on March 25^th.

In today's discussion, I am going to focus on our blade servers. Data centers today have faced increasing challenges as they have grown. The sprawl of many servers, plus the resulting challenges to power and cooling, has dramatically increased the role of blade servers. According to industry research firm IDC, in calendar Q4 of 2008, blades made up roughly 15% of the x86 server market by volume and Dell was ranked #3 worldwide with 9% market share. Per IDC, we grew our blade units by roughly four times the industry growth rate in calendar Q4 of 2008. IDC also projects that blades are expected to experience strong growth in the mid-twenty percent range from 2010-12.   

With our M-series blades, the goal from the beginning was to design the most power efficient server enclosure in the world. Another driving force in data centers today is virtualization. Blades fit perfectly in a virtual environment as they take up less space than normal rack mount servers and together with virtualization, provide customers a physical and virtual consolidation to save data center space and ease management. Dell provides industry leading solutions for customers running virtualization. Our ability to boot directly to VMware software is also a key differentiator for us. Dell's virtualization servers provide 50% more DIMM slots in the M905 than any competitive four socket server and 33% more high speed I/O.

So how competitive are our blades? We hired a third party firm to run the exact same server configurations and benchmarks on Dell, IBM, and HP blade enclosures. The result showed that our existing M-series blades had up to a 19% power advantage, and up to a 12% performance advantage, over our nearest competitors. Last week, we announced some further enhancements to our M-series blade portfolio - our new blade architecture now has 27 percent lower acquisition cost and delivers 17 percent lower TCO (total cost of ownership) over 5 years per rack compared to HP's c-Class.

So from a competitive standpoint, we are very well positioned in the blade market space and we are the only vendor to provide fully modular switches allowing customers to grow their blade enclosure throughput as their data center needs grow. With our M-series blades, we also offer FlexAddress, which is a low cost way to keep the server's Ethernet or Fibre Channel connection when changing a blade. This can help reduce customer downtime and works with any switch infrastructure a customer uses today. Designed to solve the major challenges of any data center, our M-series blades can be the ideal way to unlock the optimal data center within a customer environment by maximizing the power, cooling, and consolidation needs of today and tomorrow.

As always, we encourage you to ask questions or leave comments on Dell Shares.

Today we introduced our new, business Latitude E-Series notebook line.  This is the largest product rollout in our history.  You may remember that one of our five strategic priorities is focused on notebooks.  This launch is another milestone in notebooks as we move further down the path of expanding our number of products, designing around specific cost points and customer needs, while simplifying the overall experience for our customers. 

As background, Dell has long been a leader in the commercial notebook space, currently holding 32.9% and 19.2% share positions respectively in the US and worldwide according to IDC.  Overall our corporate business is a $52 billion business based on the past four quarters and Dell has sold over 50 million Latitude notebooks since the product's introduction in 1994.  The importance of our notebook priority is underscored by a number of trends.  Notebooks are expected to outsell desktops by seven times during the course of 2008, growing to a $137 billion opportunity by year-end.  This increase will be fueled by explosive growth in the emerging countries, where Brazil, Russia and China all grew at over two times the industry in the past year.  In fact, many new users are simply skipping desktops and adopting notebooks as their first PC. 

Size isn't the only important dynamic defining the notebook industry, as notebook replacement cycles are typically faster than desktops and carry traditionally higher average selling prices and margins. 

We typically undertake a wholesale refresh of our business products every five to six years to provide consistency and longevity for our corporate customers.  This time around we have made significant changes from the typical corporate product rollout.  We have listened to our customers whether they are road warriors, typical office users, or those with specialty and advanced performance needs.  Based on that input, we have completely revamped the line, differentiating ourselves from the competition in terms of design, performance and portfolio breadth. 

Some of the key product highlights, which set Dell apart from the competition with this launch, are: 

• A completely new look as we have made use of advanced materials, more aggressive design, and even added colors as we are beginning to see "consumerization" in the business market.
• Highly mobile business customers continually ask for more battery life. In these news systems, battery lives can last as long as 19 hours on a single charge and have accelerated charging capabilities.
• Dell Latitude ON, which provides near instant access to email, internet, and other calendar related items with multi-day battery time without full operating system start.
• Better connectivity and security features with Dell Control Point. Dell Control Point is an exclusive application enabling management of all connection configurations and customizable security profiles in one spot rather than making changes in several control panels and applications.
• This new product line also has significant range with everything from an ultra-portable system weighing in at only 2.2 lbs to a semi-rugged notebook, which has an outdoor viewable display and shock mounted hard drive to a product with superior graphics capabilities and a quad-core processor to handle the most demanding computing needs.

You will hear a lot about this launch over the next several weeks.  I encourage you to learn more about the E-Series products at our E-Series site launch page (http://www.digitalnomads.com/).

 As always, we welcome your comments and feedback on the launch through this blog.  We look forward to hearing from you!

As I had previewed during our Q1 earnings call last month, I recently sat down with Brad Anderson, SVP and head of our Enterprise business, to get some more insight into our virtualization strategy, how it relates to our Server and Storage business, and virtualization's impact on the industry and Dell. Simply put, our mission at Dell is to Simplify IT by eliminating complexity in customer computing environments. There are a number of ways we are doing this - and virtualization is a critical enabler.

Virtualization has been growing rapidly because it solves real customer problems related to space, cost, and power. One of the things to keep in mind is that dynamic virtualized server environments work best when matched with an equally dynamic storage solution and that's why storage virtualization is of equal importance. In addition, you may also be interested in a host of virtualization related topics on Direct2Dell, our blog site for customers, which might further augment the v-log that follows.  

We hope you find this discussion helpful. The vlog format is a new way for us to have a conversation with you and we look forward to your feedback. We have included a few supporting slides in PDF format in conjunction with the vlog that you can download or print. As always, we will respond to your questions and comments posted on this blog site as well as via email and over the phone. So please feel free to post on this site or contact us directly. We look forward to hearing from you! 

Click here to view the PDF file associated with the vlog.