Dell to step up growth in China's enterprise server market

The Texas-based firm wants to strengthen its dominant position in this growing sector despite facing competition from rival Lenovo

PUBLISHED : Thursday, 10 October, 2013, 12:00am
UPDATED : Thursday, 10 October, 2013, 4:00am

Computer maker Dell plans to bolster its lead in the mainland's growing market for enterprise servers, despite efforts by rival Lenovo to expand operations in that niche over the next few years.

The privatisation of Texas-based company Dell, which is the world's third-largest personal computer supplier behind Lenovo and Hewlett-Packard, is also expected "to accelerate development of its capabilities in the market", Philip Davis, the Asia-Pacific vice-president for Dell's enterprise solutions business, told the South China Morning Post yesterday.

Founder Michael Dell and technology investment firm Silver Lake Partners last week received all regulatory clearances for their US$25 billion buyout deal, which is expected to close by the end of this month.

We plan to … focus on the entrepreneurial spirit that made Dell … successful

Dell, the chairman and chief executive of his namesake company, had earlier said: "We plan to go back to our roots, focusing on the entrepreneurial spirit that made Dell one of the fastest-growing and most successful companies in history."

The company's "Greater China" operations, which include Hong Kong and Taiwan, employ about 9,000 staff. It plans to add about 100 new sales and marketing personnel this fourth quarter to meet further expansion into the mainland's tier-four to tier-six cities.

"We're adding significant sales capacity to go after what we call preferred accounts, or mid-market companies, as we cover more of the mainland's lower-tier cities," Davis said.

The government has estimated that there are about 40 million small and medium-sized enterprises on the mainland.

Dell is spending about US$25 billion a year on the mainland in terms of manufacturing, the sourcing of information-technology components and related products.

Eric Peng, the research manager at technology analyst firm IDC in Beijing, yesterday said: "Dell has led server shipments on the mainland for the past five quarters."

In the quarter to June, Dell led the top-five suppliers of so-called x86-standard servers, which included International Business Machines (IBM), Lenovo, Inspur and Huawei Technologies.

The x86-standard servers represent the low-cost, general-purpose corporate computers used to run business applications and serve as the basic hardware inside data centres.

Lenovo has said it would become a bigger player in the server business within three years. While its alliance with storage giant EMC is helping build up its capabilities, speculation has been rife that Lenovo plans to buy IBM's x86 server business unit to speed up its expansion plans.

Davis said: "We take competitors seriously, but we want to continue to grow faster and remain No 1 in this market."

Dell is already the leading supplier of servers and storage systems used in the vast data centres of major Chinese internet companies, including Tencent, Baidu and Alibaba Group.