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Dell Beats Peers with PowerEdge Servers

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Dell Inc. is going through a revival phase as it begins acting on the strategies discussed in the Dell Enterprise forum in June 2013, to evolve its business model.

Dell has adopted some innovative solutions, which include the PowerEdge 12th generation servers. These servers are designed to attract more customers and address more dynamic business requirements. While they increase the level of business efficiency, productivity and reliability, they effectively reduce costs.

Dell is making valuable contribution to its customers. The company has been instrumental in reducing the Chinese steel maker TAGAL’s cost of ownership by 20.0%, and has been able to improve the customer response time with its enterprise solution.

Moreover, the PowerEdge server and solution helped the U.S.-based marketing agency, Lopez Negrete, to transfer large multimedia files in short time. Lopez replaced the Hewlett-Packard’s (HPQ - Free Report) SAN as well as the 3Com switches with the Dell Compellent Storage Center and Dell Networking switches.

Moreover, recently Dell helped Redstation, a co-location service provider, to gain momentum and experience growth of around 70.0% with the help of a dedicated infrastructure and cloud services in combination with its PowerEdge 12th generation servers. The company made a cost benefit analysis to choose the Dell PowerEdge servers, instead of offerings from H-P and Supermicro.

Thus, businesses and customers are getting a reasonable amount of support by opting for the Dell solution, which in turn is increasing the customer loyalty of the company in the long run.

We believe that, customer success stories are good for the company, but Dell’s senior management is of the opinion that the company is facing its biggest challenge in the Consumer and Notebook segments. Moreover, revenues have also taken a hit.

The company, however, needs to adopt innovative strategies and explore other businesses to reduce its over-dependence on PCs. The collaboration with Oracle (ORCL - Free Report) is one of them.

In spite of all the strategies, the headwinds faced by the company make us apprehensive about its future. In the past year, the company has had its share of challenges in the form of tough competition from IBM (IBM - Free Report) and Apple Inc. (AAPL - Free Report) , as well as a restricted spending environment which hurt revenues.

However, we expect new deal wins and privatization to help the company.

Dell Inc. has a Zacks Rank #5 (Strong Sell).

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