Dell: Throwing its weight around
Published: 12 Apr 2006 15:55 BST
To some, Dell marches to the beat of Intel and Microsoft drums, dutifully following their research and development plans. But to hear Kevin Kettler tell it, the PC maker often takes its own lead.
Not only is the company active in establishing technologies, but often it's the kingmaker for emerging standards, Dell's chief technology officer says. In an interview at LinuxWorld in Boston last week, Kettler outlined several areas where Dell has gone its own way — over objections from Intel and Microsoft — and has cut behind-the-scenes deals that brought new developments to market.
Essentially, Kettler argues, Dell was responsible for selecting, if not necessarily developing, many of the technologies in today's desktop computers and servers. Among standards for which he says Dell deserves credit are 802.11 wireless networking, PCI Express communications technology and 64-bit extensions to Intel's x86 line of processors.
Dell's assertiveness has led to friction at times between the company and its major allies, however. Just last Monday, Kettler spent eight hours in a meeting with Intel. It was productive, but it "wasn't pretty", he says.
In the past, Microsoft and Intel had more power, says Roger Kay, an analyst at Endpoint Technology Associates. There were few alternatives when PC companies wanted to buy chips or operating systems, and not many computer makers were dominant enough to set terms. But now, with major consolidation in the number of PC sellers as well, there are more power struggles, he says.
"Some very large players — Cisco in networking, Microsoft in operating systems, Intel in chips, Dell in PCs, Best Buy in distribution — they're all jockeying for a dominant position, bluffing, feinting," Kay says. And overall, Dell does indeed hold more power than the past. "It's a little braggadocio, but I think essentially the story holds," he adds.
But overall, Dell tends to follow Intel's lead and isn't setting the agenda, says Gartner analyst Steve Kleynhans. "They tend to get involved at the point where technology is getting standardised, and they popularise it. They get it out to a lot of people," he says. "But I don't see them as being the driver of a technology or the one that sets the direction."
Dell's duels
In the case of wireless networking, Dell pushed back against Intel's fondness for the now-defunct HomeRF standard, Kettler says. It did so strongly enough to convince the company to switch its support to the 802.11 standard that is widely used today.
Intel saw HomeRF as inexpensive and good for the home. Dell, however, wanted a single technology for work and home, so customers wouldn't have to switch network adapters when they carried their laptops back and forth, Kettler says. Dell convinced Intel to go with 802.11 everywhere, but to price it at the same level as the cheap HomeRF alternative. It argued that Intel would make more money from selling a large number of 802.11 adapters with a slimmer profit margin than from selling smaller amounts of a more expensive adapter geared to work environments.
It was, therefore, Dell's actions that dramatically reduced the cost of 802.11 networking gear, he argued.
Intel declined to comment on specific situations described this story. In general, though, it acknowledged both cooperation and some tension with Dell.
"We love Dell. They indeed play a critical role with innovation and standards as the world's largest seller of PCs, and they certainly keep us on our toes every day," the company says in a statement.
More tension arrived in the area of processors, especially when Intel was faced with a move to 64-bit chips. Instead of endowing its x86 chips, such as Pentium and Xeon, with 64-bit features, Intel aggressively pushed its Itanium line. Dell, though, urged Intel to boost x86 — the direction rival chipmaker AMD took.
"Next time to you talk to Pat [Gelsinger, head of Intel's server group and its former CTO], ask him where the demand for 64-bit memory extensions [to x86 chips] came from," Kettler says.
While Dell ditched its Itanium systems in 2005, the decision to do so actually came much earlier, Kettler says. It made the shift in 2003, when it dropped plans for an eight-processor Xeon server. The time lag was because Dell had to keep selling some models for those few customers who wanted Itanium systems, but most just weren't interested in them, he says.
If it were up to Kettler, Intel would drastically scale back its Itanium work — a direction 180 degrees opposed to Intel's increasing investments in the chip. "I ask how many developers they have on Itanium," every time he meets with Gelsinger, he says. Whatever the answer, Kettler says, "That's two times too much."
Kettler oversaw Dell's memory technology before becoming CTO four years ago. In that earlier role, he inherited one mess: Intel's strong affinity for Rambus memory subsystem, a product fraught with delays, technical difficulties and business problems. Intel eventually backed off the Rambus technology in favour of today's prevailing standard, DDR memory, which is more broadly endorsed.
More recent memory troubles have hit Intel. The slow transition to a variant of DDR called FB-DIMM is holding back the arrival of servers with dual-core Dempsey Xeon processors. Dell suffered because Intel didn't draft enough industry support for FB-DIMM, Kettler says.
Dell didn't invent PCI Express, the higher-speed successor to the prevailing PCI technology for plugging in video cards, but it should get more credit for ensuring its success, Kettler says. It was Dell's market clout that gave graphics chip companies such as ATI and Nvidia the confidence that they could make the jump to PCI Express from the previous AGP connectors, he says.
Picking on Microsoft
Intel isn't the only major ally to have fallen out of step with Dell. The PC maker's customer surveys have led it to believe the Blu-ray format should succeed DVDs, Kettler says. At the same time, royalties for Blu-ray are lower than for the rival HD DVD format, and the Blu-ray video content is better, he adds.
Microsoft and Intel endorsed HD DVD over Blu-ray in September, and HP, formerly a strong Blu-ray advocate, softened its stance shortly afterward. Kettler suggested Microsoft hasn't revealed the true reason for its fondness for the format. The company has a "franchise to protect", he says: its Xbox business, which competes with the Blu-ray-enabled Sony PlayStation 3.
Microsoft, not surprisingly, disagreed with this assessment and asserted its motives for preferring HD DVD are broader. HD DVD drives and disks are cheaper and arriving sooner, argued Jordi Ribas, director of technical strategy in the Windows Digital Media Division, and interactive elements of the disks are easier to program in HD DVD's iHD than in Blu-ray's Java.
"With Intel and HP sharing our views on this as well, I would say these (factors) are more critical for the PC ecosystem than for gaming," Ribas says. "Blu-ray has been spinning a good yarn over the past year, but it's becoming clearer that the technology is more expensive and has fewer features, and many of their technology claims are far from deliverable."
Dell is sticking to its guns, though. "Microsoft may bitch, Intel may bitch," but the customers want Blu-ray, and that's what matters to the PC maker, Kettler says.
While Dell has argued that it has a tight connection to customers, it doesn't have a perfect track record of predicting what they want, Kleynhans says. "They didn't do so well with the Dell DJ" music player, and the company opted for smart cards to store encrypted passwords on PCs rather than the trusted platform modules that the industry ended up preferring, he says.
"History shows there are wins and losses for all of these guys," Kleynhans says.
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