SAP is driving down into the midmarket through an extension of its alliance with Dell by allowing the company to install SAP software for customers using new Dell hardware.
The deal, announced Wednesday, is designed to attract companies migrating off of Unix platforms onto Windows and Linux platforms hosted on Dell servers.
Dell's professional services organization plans to focus on SAP installations by providing migration and installation services, along with performance tuning, for shared customers.
"Dell has very low-cost hardware, and in the smaller enterprise market, companies are using Dell hardware," said Michael Dominy, a senior analyst on business applications and commerce with Boston-based Yankee Group. "SAP enterprise business application software coupled with a Microsoft operating system, and low-cost Dell hardware, is an attractive value proposition for the smaller enterprise market."
Earlier this month, Oracle Corp. also courted midmarket customers by announcing it would bundle its database software on Dell servers.
"These companies are recognizing the growth that the midmarket offers for their software," Dominy said.
"We have a very good partnership with Dell," said SAP chairman and CEO Executive Henning Kagermann. "We hold similar visions in lowering the cost of ownership and making systems easier by driving down the cost of configurations."
So far, there have been more than 5,000 SAP installations on Dell hardware, Kagermann said.
Dell views the arrival of SAP NetWeaver as a technology that will help customers decide to make the transition from scale-up SMP servers to scale-out configurations of Dell servers, said Dell CEO, Michael Dell.
The agreement could help Dell triple its market share for SAP product installations, Dell said. Dell expects to eventually see $1 billion a year in sales from such systems.
"Customers are recognizing the value here and we believe and expect that over the next few years we can triple the number of installations," said Dell, speaking at yesterday's announcement. "As we drive the cost of computing engines down, there's tremendous opportunities here."