Dell Revamps Market Strategy with Project Hybrid

By Chris Preimesberger  |  Posted 05-17-2007
SAN FRANCISCO—Dell has been roundly rocked by serious problems of late: falling sales numbers, the move to replace an inefficient CEO, and major lawsuits brought by the attorney general of New York accusing the company of fraudulent or misleading sales tactics and by investors who contend that the company issued false public claims about its financial health.

Changing the subject, the computer and server maker, based in Round Rock, Texas, convened a session May 17 at the W Hotel here to tell journalists and analysts, although not in great detail, how it intends to "redefine the industry view of business computing."

The company introduced an initiative called Project Hybrid, which promises new notebooks and laptops, blade servers, and other products that will "leapfrog current competitive offerings with the software, services and architecture to address specific solution needs," a company spokesperson said.

Most of the new products and services will become available sometime in the second half of 2007, the spokesperson said.

"Project Hybrid is the first step in Dell's plan to radically change the business computing industry, just as the company's 20-year-old build-to-order manufacturing and sales model changed the way companies buy computers," the spokesperson said.

Dell shows its first flash-driven notebook

As part of Project Hybrid, Dell showed its first new 32GB solid-state, flash-based laptop at the San Francisco briefing, becoming the first U.S. manufacturer to offer a flash-based drive as an alternative to HDD (hard disk drives) on corporate notebooks.

Korea's Samsung previewed the first flash-driven laptop at the CeBIT conference in Hannover, Germany, in March 2006, and launched the first batch of consumer units, under the name Origami, in 2006 in Japan and Korea.

Those first "flashtops" featured a 32GB, 1.8-inch solid-state drive similar to Dell's. Dell uses a 32GB, 1.8-inch SanDisk flash drive on its Latitude D420 ultramobile and D620 ATG semirugged notebooks. Flash memory is expensive, however, so the Dell 32GB flash drive will push the overall cost up about $300 over a similar machine with a standard disk drive, if ordered from the factory to be installed as the main drive, Dell Chief Technology Officer Kevin Kettler told eWEEK. If ordered separately, the drive costs $549.

The D420 business notebooks start at about $1,200 and are available now. Pricing for the D620, a larger notebook, starts at about $1,500.

The Samsung flashtop's initial retail price a year ago ranged from $2,400 to $3,700. However, flash memory chip prices have come down slightly in the last year, and they are expected to continue to decline as fabrication factories come up with more efficient ways to manufacture the silicon wafers. But flashtops will remain relatively expensive for the next few years, flash industry insiders told eWEEK.

At first, industry experts say, these new solid-state notebooks and laptops will appeal to only a certain portion of the overall market—those not planning to use them to store a lot of music, video, photos or other space-hogging content. Flashtops will be used for basic functions: to cruise the Internet, use e-mail, and write and store word processor or spreadsheet documents.

But the faster performance of flash-based laptops (at 53MB per second, NAND flash reads data about 300 percent faster and writes 150 percent faster than a conventional laptop hard drive), silent operation (no cooling fans needed), lightweight form factor and much-improved battery life are hard factors to ignore.

New blade servers on the way

Dell also announced "next-generation" blade servers targeted at complex virtualization deployments. Kettler said Dell's approach will be to focus on simplifying system management and security and energy efficiency with new, dual-core processors and a more efficient architecture.

Is Dell's change in direction putting it on the right track? Click here to read more.

As of April 10, Dell has made available two new servers, the PowerEdge 2970 and the PowerEdge Energy Smart 2970, which use Advanced Micro Devices' new dual-core Opteron processors. Both server types are engineered to draw about one-third less power, yet deliver about 100 percent more speed per watt than the previous generation of Dell servers, the spokesperson said.

The new blade server for virtualized applications is expected out later in 2007, Kettler said.

"It is true that virtualization, even though it is gaining momentum in the enterprise, still has its skeptics," Kettler said. "I like to equate what's happening with virtualization now to when wireless first started taking off. Remember, there was a lot of skepticism about whether wireless bandwidth and products could handle the loads [they were] being asked to handle."

Kettler said that, in general, Project Hybrid products will "remove complexity and the resulting inefficiencies associated with complexity across the life cycle of the products. We are extending our open invitation now to embrace what we call 'Business-Ready Computing,' which will simplify IT, reduce maintenance costs and allow companies to focus on more than just keeping the lights on."

All Project Hybrid servers will be designed to integrate directly into existing systems, with little or no reconfiguring for IT shops to do, Kettler said. How Dell will do this was not explained.

"We're not here to tell you all the details of Project Hybrid right now," said Jay Parker, director of the PowerEdge server group. "We're letting you know the direction we're going, and we'll fill in the details as we go along. We'll be having more of these sessions in the future."

Adapting the message to the market

Analyst Charles King of Pund-IT said he thinks Project Hybrid may turn out to be a "profound" move for Dell.

"In some cases, their messaging around certain products has been very, very narrow and aimed at specific types of communities," King told eWEEK. "What we saw today reflects a recognition of sorts that discussions about IT are in every part of the market now. If you go out with a set of new products—or even a product strategy—without addressing that part of the audience, you're killing yourself."

King said he thought it was interesting that "Dell was so forthright about describing the difference in the way they did things 10 years ago, which was very tactically product-focused, and that they are moving to a much more visionary, strategic sort of effort now."

This is all to the good, King said.

"That is the type of approach that the market requires. It's a shift from, 'Who can I get the cheapest box from the fastest,' which was common a few years ago. That has been replaced by people saying, 'I got a problem; how can you help me fix it?'

"What Dell intended to show was that it now has a grasp of these larger issues, such as energy efficiency, the increasing dependency on virtualization, and that they have the tools and the technology at their beck and call to make solutions for that sort of thing," King said.

Check out eWEEK.com's for the latest news in desktop and notebook computing.