Dell switches on networking heat

Direct sales approach could trigger vendor price war.

Dell is set to strengthen its foothold in the networking market by re-branding a range of switching products. The direct vendor's entry into the network arena is certain to put further pressure on reseller margins and threatens to trigger a price war among vendors.

The switches will be manufactured by Delta Networks. Initially, Dell plans to re-brand two switches - one with 16 ports, the other with 24 - which will be aimed at the same small to medium sized enterprises that it currently targets with low-end PCs and servers.

The company's PowerConnect switches will go on sale in the US immediately, and a global roll-out is expected to follow.

Paul Malcolm, UK country manager at 3Com, said that Dell's arrival will put extra pressure on switch prices. "Dell will create competition because the direct sales model is the cheapest way to sell, and it will come in at a lower price point," he said.

However, Mark Darvill, professional services director at Cisco reseller Logical, predicted that, unless the products are easy to deploy, Dell may find itself in trouble from a professional services perspective. "If they are anything other than vanilla flavour, customers often run into problems. How will Dell support them?" he asked.

Simon Minett, operations director at Cisco distributor Comstor, said: "I don't see Dell's direct sales model as a threat to the channel because it already offers networking products via third-party vendors. We have not even registered them as competition."

However, Minett warned that the PC and server specialist could be successful if it concentrates on the low-end market.

A Dell spokesperson confirmed that it would sell switches through direct routes, saying: "We have an established direct sales model and this will be mirrored with the switching products."