As per a recent agreement between Dell Inc. (DELL) and Brocade Communications Systems Inc. (BRCD), the former gains access and will be able to sell Brocade network switches and gear. These products are targeted at large corporate data centers. Under this agreement, both companies will share revenues, which Dell generates through sales of the designated products.
Other than this third party agreement, Dell also sells other third party networking gears from Cisco Systems Inc. (CSCO) and software from Scalent Systems Inc., which helps in the coordination of network switches and server computers. We believe this is an additional source of revenue for the company and a business model, which will support its long-term growth.
This is a counter move from Dell, as big networking companies like Cisco Systems are entering the server market and will start selling its own servers. Dell is also incorporating networking equipments into its product portfolio. This apart, International Business Machine (IBM) and Hewlett Packard Co. (HPQ) have built their own networking setup. So we can see a clear trend here. The business of major IT companies and networking companies are overlapping and rightly so, as customers are looking for a total system solutions from a single vendor.
We believe this is a good business strategy as recession has hit the PC sales. The deal will help Dell to increase its product portfolio and win large customers. Dell saw stable demand in the recently concluded quarter and we believe this deal will further improve the company’s revenue prospects.
Read the full analyst report on “DELL”
Read the full analyst report on “BRCD”
Read the full analyst report on “CSCO”
Read the full analyst report on “IBM”
Read the full analyst report on “HPQ”
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