Dell Servers Getting ‘Significant List Price’ Change As Costs Lower

‘We have made a significant list price moves over the past couple of months in servers and we’re going to continue to make sure that we’re priced competitively,’ says Dell’s global Channel Chief Joyce Mullen.

Dell, the worldwide server market share leader, says it’s made “significant” pricing moves over the past couple months to ensure the firm is priced competitively against the likes of Hewlett Packard Enterprise, which recently lowered the pricing of its HPE ProLiant server line.

“It’s no secret that commodity costs are coming down. So we have made a significant list price move over the past couple of months in servers and we’re going to continue to make sure that we’re priced competitively and deliver the best value to customers,” said Dell Global Channel Chief Joyce Mullen in an interview with CRN. “HPE launched some promo-type pricing with partners. So of course we look at that. We put that into our assessments of how we price competitively, and we’ll continue to monitor that and make sure that where are in a position where we’re creating enough value for partners and for customers.”

Michael Murphy, president of Nanuet, N.Y.-based VirtuIT Systems, a longtime Dell Technologies partner, said Dell is working with partners on certain accounts to win deals against server competitors like HPE and Cisco.

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“We’re working on a fairly large deal right now. We’re head-to-head with Cisco UCS. This customer specifically is a legacy Cisco UCS customer. We’re trying to compete with Dell’s new MX7000 chassis,” said Murphy. “Dell has gotten incredibly aggressive in order to win this deal.”

Murphy said Dell is doing what it can to help VirtuIT Systems “knock out” Cisco in the account and replace it with Dell solutions. “Dell has the products to do it. When we talk about how the MX7000 scales and how it handles east-west traffic compared to north-south traffic, it has a really compelling story. It’s really something nobody else can do,” he said. “I think we’re going to win it. They have a lot of Dell EMC storage and they don’t have any Dell servers.”

Mullen did not provide specific details on what sever brand or pricing drop percentage in terms of where Dell is lowering prices, but did say lower commodity costs cut across the company’s entire server portfolio.

“Costs are coming down. One of the benefits of Dell Technologies is we don’t have tons and tons of inventory in the distribution channel,” said Mullen, president of Global Channel, OEM and IoT Solutions. “So we can move faster and that helps us a lot when commodity costs are coming down because we are in a position that we’re not trying to protect any inventory that we sold in at a higher price. Our goal is to pass that on to customers as fast as possible. That helps us grow.”

Round Rock, Texas-based Dell Technologies once again increase its global server market share in the first quarter of 2019, according to research firm IDC. Dell generated nearly $4 billion in server revenue for the quarter, up 9 percent year over year. The company’s market share rose from 19.3 percent in first-quarter 2018 to 20.2 percent year over year.

Dell’s main competitor, HPE, lost worldwide market share by having flat server revenue year over year of $3.5 billion. HPE’s server market share dropped from 18.5 percent in first-quarter 2018 to 17.8 percent year over year.

Inspur placed third in terms of worldwide market share behind Dell and HPE with 6.2 percent share, followed by Lenovo with 5.7 percent share and Cisco with 5.3 percent share.

Although Dell Technologies took home the gold in global server market share, the company reported a 9 percent decline year over year in server and networking revenue during its first fiscal quarter. Dell executives said the drop was largely due to a decline in server sales in China, in part because of the U.S.-China trade tensions.

Mullen told CRN she wasn’t worried about the sales drop because China represented “the bulk” of the 9 percent sales drop. In contrast, she said Dell’s server position in its Europe, the Middle East and Africa region is flourishing.

“We have an incredibly stronger server lineup. We took the No.1 position in EMEA. We’ve been after that for a long time,” said Mullen. “We’re going to continue to make sure our partners have the appropriate training and motivation to position and lead with Dell Technologies servers. By the way, 5G is still a huge opportunity. We’re just at the beginning of that. We’re expecting to see that improve.”