Dell Trumpets Q1 Server Gains, HP Disputes Data

Dell Enterprise Solutions President Marius Haas Tuesday told CRN that the company is seeing market momentum in server sales versus rival HP even as Dell moves to close its $24.4 billion leveraged buyout.

"From a data perspective based on what we are seeing and based on the information from the market that we are getting, we are highly confident that we are in a 'take share' position both from the data being shown as well as from the customers that are asking us to partner with them more aggressively," said Haas.

Dell executives pointed to preliminary worldwide first quarter data from market researcher Gartner that shows Dell's unit server shipment share up 2.6 percent in the first calendar quarter, ended March 31, compared to the year ago quarter. HP's share during the same period was down 15.2 percent compared to the year ago quarter, according to the preliminary Gartner data.

[Related: HP Enterprise Boss Rallies Partners To Capitalize On IBM, Dell Uncertainty ]

The first-quarter server data is critical because it is one of the first third-party data points that measures Dell's performance since the company announced the blockbuster buyout on February 5.

HP retained the No. 1 spot with 25.0 percent of the server market in the first quarter of 2013, down from 29.2 percent in the first quarter the prior year, according to Gartner.

Dell maintained the No. 2 spot with 22.2 percent of the market in the first quarter of 2013, up slightly from 21.5 percent in the year ago quarter, Gartner said. Gartner, which noted that the first-quarter server shipment numbers are preliminary and could change, plans to release the final first-quarter shipment figures at the end of May.

Both Dell and HP are undergoing major transformations in their businesses. Each perceives those shifts in the other as a weakness that opens the door to gain share, leading to more intense competition in the sales trenches.

The two vendors are competing fiercely for share of a shrinking market. Overall server shipments fell 0.8 percent in the first quarter, compared to the previous year, Gartner said.

Jim Ganthier, vice president of global marketing in HP's server organization, said HP considers the IDC server shipment data, which CRN was unable to obtain, as the "industry standard" market share measure. What's more, he pointed out that HP has led the server market for 17 years in a row.

"Frankly one quarter does not a trend make," asserted Ganthier. "Seventeen years is a trend."

That said, Ganthier said he believes the Gartner numbers will change. "We are still having conversations with them," he said. "I am just not ready to tell you how much or what the final numbers will be."

"For the last 67 some odd quarters we have led this market, for as long as this market has been in existence or as long as IDC has been measuring," said Ganthier. "And the reason why we have been able to do that is because we have been coming up with truly differentiated products." As an example, Ganthier pointed to HP's new Moonshot server, which he boasted is winning raves from CIOs because of its ability to deliver more server muscle with an 89 percent smaller footprint, 89 percent less energy and 90 percent less density.

NEXT: Haas Says Customers Are Not Concerned Over Leveraged Buyout

Haas, for his part, said market data clearly shows that customers are voting with their wallets and are not concerned about uncertainty stemming from the Dell leveraged buyout as they make server and enterprise solution IT decisions.

"There is no concern from customers," Haas said. "As a matter of fact, they have a much higher concern about instability and uncertainty of our core competitor in this space."

When asked specifically about uncertainty surrounding HP, Haas, a former nine-year HP veteran who at one time headed up HP's networking business and before that was global head of corporate M&A for HP, pointed to the turnover at HP with "three CEOs in three years, most core businesses in decline, massive debt [and] executive attrition. If you wanted to define uncertainty, those would be four key things."

Solution providers, for their part, say Dell's robust channel engagement model with a single account manager being compensated for all sales going through a partner is translating into higher server market share for the company. In contrast, they said, HP has multiple partner business managers compensated on individual siloed businesses such as enterprise, software or printing and personal systems.

"Dell has one account manager to help me drive my business," said one enterprise solution provider CEO, who has significant Dell and HP business and did not want to be identified. "My Dell partner manager gets comped and covered on everything we do. HP's partner business model is siloed with multiple partner reps that don't get comped on everything. That siloed approach is leading partners to sell other vendor lines whose partner coverage model is more robust. I want a single HP PBM [partner business manager] that gets comped on everything and covers all products so they are vested in all our business and growth."

Debi Bush, CEO of CMIT Solutions of Denver (Colo.), said Dell's channel success with her company is due in large part to a solid channel team at Dell. She said Dell's leveraged buyout has not slowed Dell's market momentum.

"I haven't gotten any concerns from clients," she said. "That hasn't come up. We haven't been concerned with it and business continues to grow."

NEXT: HP Fights Back With Competitive Programs

Ganthier maintained that partners have the ability to make more money selling a full HP solution than a Dell solution. He said the new HP PartnerOne program changes, which go into effect May 1, dramatically increase the ability for partners to make more money with a simplified "pay for performance" model that includes a lucrative backend rebate program and no cap on how much partners can make.

HP also has put in place a competitive program for partners competing against Dell that provides resources to match any Dell server competitive price. That program went into effect in April and runs until May 31.

"Depending on the deal size or the number of employees, we will match or beat [Dell] on any one of them," Ganthier said, noting that HP is providing "less than zero" percent financing to win deals. "You are hearing what I would call annoyance in the folks from Austin because the programs are working. The products are getting great reception. And we are executing and delivering on everything we said we would."

HP wasn't the only top vendor to see server market share declines during the quarter. No. 3 IBM dropped 14.4 percent to a 9.8 percent share, while No. 4 Fujitsu saw share drop15 percent to 3.2 percent, according to Gartner's preliminary data.

Aside from Dell, Cisco was the only other vendor in the top five to see market share gains. Cisco's market share grew 39.5 percent to 2.4 percent.

Haas said Dell has a big advantage with Dell Founder and CEO Michael Dell leading the company's transformation.

"Michael has been at the helm for 29 years. The only question is can we accelerate the investment of our transformation," he said. "Customers are extremely satisfied with where Dell is. We've made $16 billion in investments and acquisitions to fill out our portfolio over the last three years. Momentum is clearly in our favor."

STEVE BURKE contributed to this article.

PUBLISHED APRIL 30, 2013