Services Push Must Be Part of Dell's SMB Strategy, Experts Say

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As any vendor can tell you, services are where it's at in terms of higher margins, cross-selling, up-selling and more complete customer relationships. So it's not surprising that Dell is trying to make a new expansion into services a key part of its "Dell 2.0" business transformation effort.


Indeed, Gartner says that Dell will need to flesh out its just-launched lineup of Vostro products with service offerings to make it truly appealing to the target market of SMBs, reports vnunet.com.


Vostro marks Dell's most visible effort to date to move beyond its famed transactional model and forge more solid and lasting relationships with SMBs.


While low price points and a center staffed by dedicated support specialists may be enough to lure some SMBs from Dell's consumer products to the Vostro line, opines Gartner, the initiative falls largely flat. So far, Vostro is mainly "a branding exercise focused on creating a new navigation point on the Dell Web site," says the research firm.


Gartner says that Dell will need to do a better job of differentiating between consumer and SMB needs -- a key challenge for many vendors aiming for the SMB market, we'd add -- and offer integration with SMB servers as well as application support.


While Dell dearly wants to expands its services business, it must take pains to differentiate itself from traditional services-oriented firms like HP and IBM, opines The Register. So far, Dell has mainly offered vague references to remote IT management and "fixed time and fixed price engagements."


If nothing else, writes The Register, competition from Dell should spur rivals like HP, IBM and Sun to reassess their SMB service offerings.


Though Dell has not announced any intent to create software-as-a-service offerings for SMBs, Gartner says this would be a logical step for the company. Indeed, SaaS has been popular with many SMBs.


In an interview with ITBusiness.ca, CEO Michael Dell says the company's $6-billion-a-year services business "is growing nicely" and encompasses such services as UNIX to Linux migration, virtualization and data backup and recovery.


Dell also talks up the company's Project Hybrid, an initiative that, while still fuzzy on details, promises to dramatically undercut the virtualization solutions offered by IBM and HP on price.