

Hoping to replicate the success of its Data Center Solutions division, which sells hardware and software to the biggest hyper-scale customers, Dell, Inc. has created the Datacenter Scalable Solutions (DSS) group to go after second-tier companies whose computing demands aren’t quite as big, but which are rapidly growing their IT investments in areas like web services, telecommunications, and oil and gas research.
The new organization, announced today, targets a market Dell estimates at $7 billion in which demand for x86 servers is growing at three times the market average, according to Dell. The new division will provide “new and optimized hardware designs, enhanced fulfillment models and accelerated product introductions,” according to a company press release.
By all accounts, the Data Center Solutions group, which Dell created eight years ago, has performed well. International Data Corp. recently said Dell showed x86 server growth of 12.6 percent in the first quarter of 2015 to capture second-place overall with 18 percent market share, behind only Hewlett-Packard Co.’s 25 percent. Dell also grew faster than HP in the quarter.
Dell said the companies it’s targeting with the new division have high scalability needs but lack the internal resources to satisfy them. “It’s hard to this group of customers to predict their growth,” said Brian Humphries, president of Dell enterprise sales and strategy. “On a given day they may ask for thousands of additional servers. With a nimble model that builds on Dell’s experience, DSS is able to meet these high-volume needs.”
Executives cited the example of one unnamed high-tech company that had to maintain consistency in up to 15 computing configurations spread across the globe. “We built a new fulfillment model that didn’t exist for this customer so they had the ability to build their own custom supply chain,” said Ashley Gorakhpurwallla, vice president and general manager of Dell Server Solutions.
Dell is betting that its global reach and ability to support customers consistently across geographies will give it an edge in a market that has seen consolidation and turmoil amid falling prices. It also hopes its timing is good. IBM abandoned the x86 market last year by selling off its business to Lenovo Group Ltd., and HP is in the middle of a massive restructuring.
Dell said its corporate nimbleness is a byproduct of its leveraged buyout that took the company private two years ago. “As a private company, we can set aside investment and capability and operate in stealth mode,” Humphries said.
Dell provided few details about staffing or investment plans for the division, other than noting that CEO Michael Dell, “has been very generous with giving us quite a bit of investment to grow.” The company said there are no plans to disband or reduce the size of the Data Center Solutions group.
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