Dell’s New Line Of Servers Could Lift Its Outlook

DELL: Dell logo

Dell (NASDAQ:DELL) has developed a new line of servers based on its upcoming 10-petaflop supercomputer, Stampede. The design effort into making the supercomputer has resulted in a new line of servers, which will be marketed as the PowerEdge C8000 product line. The servers are built using Intel x86 CPUs and can be used for database applications and high performance cloud computing operations. The Texas Advanced Computing Center at the University of Texas and Dell have worked together on Stampede, which boasts thousands of C8000 servers with 272TB  memory and 14 petabytes of storage. [1]

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Dell Server Business To Get A Boost

The server line is built for easy customization, enabling users to tweak graphics processors, storage, memory and other elements inside the servers. The basic server will have up to eight blade servers with two CPUs each, two internal hard drives and additional storage and networking. The pricing is $35,000 for the C8220, $42,000 for the C8220X and about $25,000 for the C8000XD storage box.

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Servers and networking constitute 9% of our current price estimate for Dell. We estimate that Dell’s average server price will fall from near $4,000 currently to $2,000 by the end of our forecast period. This is because Dell primarily makes small capacity servers which is a volume driven market. The new line of servers are on the high-end and if the new product line can stall the average server price from declining further, we can expect a 10% upside to our current price estimate.

We have a $19.22 Trefis price estimate for Dell, which is significantly higher than the current market price.

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  1. Dell’s Supercomputer spawns new line of servers,, October 8, 2012 []