The news strategically comes at a time when investors grow more skittish at the short-term prospects of the slumping PC industry. Dell, whose enterprise segment constitutes only 19 percent of its overall revenues, is looking to shed its image as merely a PC house, aiming to topple number one server maker Compaq Computer Corp.

"People do tend to think of us as a PC company only," said Kevin Libert, director of marketing for Dell's Server Enterprise Group. "And it's becoming apparent to me that maybe the myth is around more than I realized.

"But we're now second only to Compaq, shipping 25 percent of all Intel-based servers in the U.S., and we've got 15 percent of the worldwide market," he added. In 1996, Dell was ranked 10th worldwide of all Intel-based server vendors.

In taking aim at the business end of the market, Dell took the wraps off of the PowerEdge 1550, a high-end general-purpose server, and the PowerEdge 350, a lower-end server, as well as the second generation of its PowerApp line of appliance servers.

The 1550 is the most powerful server Dell has released to date, and includes dual Pentium III processors operating up to 1 GHz, and dual, independent 64-bit/66-MHz PCI Buses for faster throughput. The system boasts up to 4 Gbytes of RAM, and up to 3-hot pluggable, one-inch SCSI hard drives for a total storage capacity of up to 108 Gbytes.

The 1550 offers configuration and application flexibility to support Internet and network infrastructure applications, such as domain controllers, domain name server, dynamic host control protocol, terminal servers and custom Web-based applications. Available in January, the system will sell for $2,599.

PowerEdge 350 has more of an eye on affordability, supporting only a single Celeron or Pentium III processor and as many as two IDE hard-disk drives. The system contains up to 1 Gbyte of ECC SDRAM memory, and dual, integrated Intel Pro 10/100+ Ethernet cards, and will sell for $1,499 in February. Both systems will be available with Windows NT 4.0, Windows 2000 Server or Red Hat Linux 7 factory installed.

The Round Rock, Texas-based company also rolled out the turnkey PowerApp. web 120 and 110 appliance servers, targeted at service providers and managed hosting companies. The 120 is built on the same hardware platform as the PowerEdge 1550, while the 110 is a Linux-based server that supports a single Celeron processor and up to two IDE hard-disk drives. Since it uses the same hardware platform as the PowerEdge 1550, the PowerApp. web 120 will also sell for $2,599, with the 110 about half of that, at $1,499.

While analysts remain cautious regarding Dell's short-term future, Dell's push away from PCs breeds market confidence. "Dell has some great opportunities in the server space," noted Bill Shope, ABN Amro vice president and analyst, whose latest report rates Dell as "hold," based on the current PC slump. "At this point they have 19 percent of revenues in the enterprise market and the rest is largely PCs.

Less dependence

"Part of our confidence over the long-term lies in the fact that Dell is aggressively shifting into enterprise. Every quarter going forward will lower Dell's dependence on PCs," he added.

In that vein, the company also announced its intent to market a 32-processor PowerEdge server based on the Unisys cellular MultiProcessing (CMP) server architecture. Dell's rival, Compaq, entered into a similar licensing agreement with Unisys in February. Targeted at data-intensive computing environments, the CMP server design supports 32 Intel IA-32 Xeon processors and will accommodate Intel's next-generation Itanium processor technology when it becomes available.

The system can be field-upgraded to Itanium processors. It can support up to 96 PCI channels, and can function under a single operating system, or can be partitioned to run multiple instances of various operating systems. While no specific product was announced at the Tuesday press conference, a multiprocessing server marketed under the PowerEdge brand is expected to be available in the first quarter of next year.

"It basically extends our whole portfolio of products to the most demanding application arenas, like high-end databases, transaction-processing, e-commerce applications and even customers considering server consolidation," said Gene Austin, vice president of marketing for Dell's enterprise systems group.