Wasn't Dell supposed to dominate the LAN market by now?

Cisco CEO's unfulfilled prediction

Three years ago, Cisco CEO John Chambers frequently mentioned Dell as an emerging competitor. "Our next generation of competition is going to come from below," he said, citing Dell among several low-cost network companies emerging in the market at the time. "It will be interesting to compete with them."

Dell's entry into the market in 2001 came with predictions that the company would roll over competitors, using its efficiencies in manufacturing and supply chain, and its powerful online direct purchasing systems. The thinking was that Dell's dominance in enterprise servers, desktops and laptops -- all commodity hardware markets -- would be parlayed into commoditized LAN switching, giving customers a one-stop shop for all IT and LAN infrastructure.

Three years later, Chambers isn't worrying about Dell so much. Dell is still in the LAN switch business, but its worldwide market share is infinitesimal -- less than a 1% share in revenue and ports, according to Synergy Research Group. And Dell hasn't introduced a new LAN switch in two years.

In a conference call with the media in August, Dell founder Michael Dell deflected questions about the company's lagging LAN business, preferring to discuss the company's "high-volume" businesses of servers and storage.

Dell's PowerConnect lineup of fixed-configuration gear is a match for any LAN competitor: unmanaged Layer 2 stackable Fast Ethernet switches and up to 48-port stackable Gigabit Ethernet switches, with advanced features such as 802.1X security and Power over Ethernet among Dell's offerings. The products have tested well, and were adopted by many loyal Dell PC and server customers. According to a 2004 test of Dell's PowerConnect 6024, "It's getting easier to hear the words 'Dell' and 'Gigabit Ethernet switch' in the same sentence," says John Bass, technical director for Centennial Networking Labs at North Carolina State University, and a Network World Test Alliance partner.

C.C. Dickson, a U.S. heating, ventilation and air conditioning supply company, has used PowerConnect gear since shortly after the product line came out.

"Everything's working just as well now as the day we bought them," says Jay Bury, IT director at C.C. Dickson.

The company has used Dell servers and workstations for many years, and the switches were first purchased as an add-on to a larger computer sale, Bury says. He found gear that cost less and was easier to use than the Cisco switches already installed.

What surprised Bury is that Dell did not enter more network equipment markets -- such as WAN routing, wireless LANs (WLAN) or core chassis switches. This shortcoming in product breadth may be what kept Dell back. Rival HP's network division offers gear from stackables, to 10G core LAN, WAN routers, WLAN switches, while traditional LAN switch vendors Foundry, Extreme and Enterasys have all expanded into WLAN and routing.

Others say Dell's switches were a step above commodity, but not quite enterprise-grade, which left the product line in limbo.

"My educated guess is that the low-end users didn't care what they plugged into and didn't need the advanced features or the wire-speed throughput that Dell offered," Kevin Tolly, president and CEO of the Tolly Group and a Network World columnist, wrote in a column about Dell's switch business. "At the higher end, network architects probably wanted a product suite that included WAN routers, firewall and VPN devices, and so forth, not to mention the most important element -- higher-end, chassis-based switches. For these folks, Dell offered a product when what they needed was a multidimensional solution, which was never in the cards from Dell."

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