Dell Sharpens Market Approach to Match HP, IBM

Dell Inc. will try to shake its reputation as a simple pusher of computer boxes with a new program for enterprise customers that combines hardware, software and services, as well as a focus on energy efficiency and virtualization.

The program, called Project Hybrid, will be launched in the second half of this year, the company announced at an event on Thursday in San Francisco.

Jay Parker, director of Dell's PowerEdge servers line, acknowledged that Dell's chief rivals, Hewlett-Packard Co. and IBM Corp. already offer this type of combination package for enterprises. However, he argued that IBM and HP seek to make customers dependent on them for services, which can be costly.

"When it comes to simplifying the environment, our competitors thrive on complexity," he said.

Dell also unveiled a prototype of a new blade server it will introduce in the second half of the year. Parker claimed it's more energy efficient than HP blades, but declined to provide more specifications about the product, or what in the prototype may change before the final product is launched.

Parker denied that Dell chose the name Project Hybrid to play on the popularity of energy efficient hybrid cars.

Dell has suffered of late as it lost the top PC sales position to HP in 2006 and trails it in server sales to businesses. Michael Dell, chairman and cofounder of Dell, took over the position of CEO from Kevin Rollins in January.

The idea of selling a combination of hardware, software and services to enterprise customers is nothing new. It's the formula that has worked for IBM and HP, said Charles King, principal analyst at PundIT Inc., a technology research firm.

Project Hybrid is Dell's way to focus more on that strategy.

"This is an attempt by the company to show they are cognizant of these issues and that they are mobilizing their energies and product development to meet these greater strategic needs of customers," King said.

Kevin Kettler, Dell's chief technology officer, showed other innovations on the market or in development, including a thin flat panel display and an 80G-byte hard drive for notebooks which boots up the computer faster than one with a conventional 30G-byte drive.

"This is where the excitement is happening about the changes at Dell," said Kettler. "It's really around how you move to the higher level of looking at customer problems in totality and on how you deliver."