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Dell tries to beat Cisco with a switch

While Cisco and EMC do a deal
Written by Ben Charny, Contributor

While Cisco and EMC do a deal

Dell Computer on Tuesday said it's now selling three new switches for small to medium-sized businesses, following recent moves by rival Cisco Systems to capture more of the same market. The switches are the $549 PowerConnect 3324, the $1,000 PowerConnect 3348 and the $2,000 PowerConnect 5212. All can prioritise web traffic, a new feature for Dell switches that's meant to assure that the most important network traffic gets through. Cisco Systems is Dell's chief rival for the estimated $12bn businesses spend each year on network switches. Cisco dominates the market, selling about 60 per cent of the world's switches. According to Chief Executive John Chambers, this position makes the company prone to "attacks from below," which is how he termed Dell's entry into the low-priced switch market two years ago. The latest switches, even with added features, remain less expensive than Cisco's, said Dell Vice President Kim Goodman. "We tend to cost less than half of the price of competitors," she said. "That's still true with this new lineup." Affordability of switches is often measured in terms of how much it costs to outfit a single port, which can be used to link a handful of desktop computers in an office. Dell says its switches cost $100 per port. Industry analysts, including the Meta Group, believe the industry average is between $300 to $500 a port. A Cisco representative had no comment. In a move to bolster its market-leading position, Cisco has made several changes recently, some directed at resellers catering to small to medium-sized businesses. In late March, Cisco also introduced its most significant upgrades yet for its biggest selling switch, the Catalyst 6500, used by about 100,000 corporations. Meanwhile, EMC has announced that it will resell a storage switch from Cisco Systems as part of a long-anticipated partnership between the two companies. Under the deal, the company will sell Cisco's MDS 9000 family of switches under the EMC name. The EMC-branded switch can be managed using both Cisco and EMC software, though EMC's software will have limited abilities at first. The switch should be available later this quarter, the companies said. The partnership is not the first for either company. EMC plans to sell a rival "intelligent switch" from Brocade Communications Systems, while Cisco has already signed deals to sell its storage switch through IBM and Hewlett-Packard. The new deal is somewhat different in that EMC will sell the Cisco switch under its own Connectrix brand, and the two companies plan to work together to promote standards for such switches. EMC also plans to develop software that can run on Cisco's switches, though it did not give a time for when that might occur. EMC is heavily touting the idea that storage software that currently runs on servers should be moved into the networking gear itself, a concept popular with switch makers like Cisco and Brocade. Cisco is betting that a shift to more intelligent switches will give it a chance to break into the market against stiff competition from companies such as Brocade and McData. Cisco entered the market after last year's purchase of privately held Andiamo Systems. "This is a clear indication of how storage will evolve in the network," said Luca Cafiero, a Cisco senior vice president. Earlier on Tuesday, Cisco CEO John Chambers noted that the company already has 40 customers for its storage switch and brought in just under $10m in storage revenue last quarter. That figure, he said, could easily double each quarter for the next several quarters. The Cisco deal is being announced at EMC's Technology Summit, a gathering of its large customers this week at the Mandalay Bay Conference Center in Las Vegas. On Monday, EMC used the event to announce plans for its first Windows-based storage system. Ben Charny writes for News.com. Ian Fried contributed to this report
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