A recent press release from Dell Inc. (DELL) confirms that the renowned personal computer maker is joining hands with Juniper Networks Inc. (JNPR) in order to offer networking solutions under Dell’s PowerConnect brand. PowerConnect enables customers to deploy a common network management platform and network operating system that will ultimately help them to reduce operating expenses.
This apart, the companies are also planning to work together on standards-based solutions for virtualized data centers, a venture that is expected to deliver technology solutions using Converged Enhanced Ethernet (CEE), commonly known as Data Center Bridging (DCB) and iSCI. Going forward, Dell will shoulder the responsibility of marketing, servicing and support of networking solutions from Juniper to business entities of different sizes like large enterprise, Small and Medium Businesses (SMB) and Public Sector Organization.
We believe this joint networking solution from Dell and Juniper will provide significant challenge to Cisco Systems Inc. (CSCO). Some of the equipment from Juniper competes with the market leader Cisco but also with equipment offered by Brocade Communications Systems Inc. (BRCD).
Diversification is clearly the key strategy, by which the large enterprises are growing their business portfolio across the globe. We believe that Dell and Juniper will form a great team to offer enhanced networking solutions to the end customer. This is expected to be a win-win for both the companies, as Juniper will get access to Dell’s large customer base across the globe, while Dell will be able to increase its product offerings, thereby increasing business volume, with a corresponding positive impact on its margin.
Dell has been venturing into new businesses of late. The company has announced that it would be promoting Salesforce.com (CRM) software products to its customers in the United States. This will increase the range of offerings to Dell’s SMB customer base while growing the services business, which typically generates higher margins. This apart, the company is planning to launch a smart phone to run on Google’s (GOOG) Android mobile operating system. This is a way to tap the fast-growing smart phone market, which is projected to grow to 235.6 million units in 2010, an increase of 27.9% from 184.2 million units in 2009.
We currently have a Neutral recommendation on the stock.
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