Dell makes first entry into workstation market

Electronic News, August 4, 1997 by Bernard McAleer

New York--Dell Computer, best known for its direct-marketed PCs, last week entered the workstation market, specifically targeting the mechanical computer-aided design (MCAD), financial services and software development markets, by introducing the Dell WorkStation 400 (EN, July 28). The company sees the opportunity to do as well in the workstation market as it did in the server market, and there will be a separate organization set up to deal with workstations as Dell had for its servers.

"In a customer profile breakdown, these affect all workstation products across all customer (types)," said Kevin Rollins, senior VP for Dell Americas, referring to the target markets of corporate and small and medium-sized business.

The Dell WorkStation 400 is priced from $3,705 for a single 266MHz Pentium II processor-based system with 64MB RAM, a Matrox Millennium video adaptor, a 2GB hard drive, 17-inch monitor and one-year Windows NT support; to $8,078 for a dual 300MHz Pentium II processor-based system with 128MB RAM, an ELSA GlintMX-based Gloria graphics adaptor, a 4GB hard drive, 20-inch monitor and one-year Windows NT support.

Dell's direct business model, the company said, allows it to sell directly to end-users, providing custom configuration and factory integration of software. This approach has made Dell as successful as it has been.

Exceeding expectations, revenues for Dell's 1Q98, ending May 4, 1997, were $2.6 billion, up from 1Q97 revenues of $1.6 billion. Net income for Dell's 1Q98, was $198 million or $1.08 per share, up from $82 million or 42 cents per share in 1Q97 (EN, May 26).

"There are two reasons for expansion into the workstation market: there is the opportunity for quick growth and Dell is ready to offer high-end systems," a company spokesman said.

The result of Dell's entry into the workstation market is not set in stone, but it is going to change the balance of power in the market.

"They're all going to be affected," said Norm Bogen, senior analyst for In-Stat. "Maybe IBM, HP and DEC will not be affected as much, because IBM, HP and DEC have service support and Unix and NT expertise."

According to Dell, it has tailored service and support programs, including a call queue for workstation products, and plans to have integrated service support from independent software vendors (ISVs). Optional four-hour on-site service response is also available for those requiring more immediate support.

Dell anticipates the WorkStation 400 will help accelerate the workstation market shift to Intel Pentium II processor/Windows NT from traditional and proprietary RISC microprocessor/Unix platform systems, expecting the workstation market to follow a pattern similar to that in the network server business. Many workstation customers require integration of open standards-based Windows NT workstations like the WorkStation 400, the company claimed, into environments using proprietary RISC/UNIX-based systems.

"This entry into the workstation market only enhances Dell's position in the industry," said Mr. Bogen. "The thing that is interesting about the PC workstation market is that it's all standard stuff. Because there's little differentiation in hardware and software, it favors Dell."

Dell forged strategic relationships with a series of ISVs. In striving to see the WorkStation 400 meet market applications, Dell said that it will target the MCAD market by teaming with hardware providers 3Dlabs and ELSA for advanced 3-D graphics accelerator support. Among Dell's intended MCAD segment software alliances are Altair Computing, Autodesk, Bently Systems, Dassault Systemes S.A., EDS Unigraphics, Intergraph Software Solutions, Micro Cadam, Parametric Technology Corp., Structural Dynamics Research Corp. (SDRC) and SolidWorks. These vendors' packages are used to create 2-D and 3-D mechanical drawings, renderings and designs.

Dell also will tap Appian Technologies for its advanced multiple-monitor support for the financial services segment. That segment's software alliances include The Math Works, Neovision, Hypersystems, Reuters/TIBCO and System Programming & Network Computing.