Dell tries to go down market

Dell (DELL) is suffering as much from falling demand for PCs and servers as any of its competitors. In fact, based on data from Gartner and IDC, it may actually be losing market share as the recession wears on.

So, Dell has decided to attack its troubles by introducing an "economy" package for some of its frugal customers and potential clients. According toReuters, "Dell Inc is introducing new server and storage products aimed at cost-conscious companies, betting that its emphasis on value can help win market share as competition intensifies."

The idea is a solid one. Dell is making a powerful appeal to IT managers at a time when they're probably tempted to spend as little money as possible. But the question investors in Dell have to ask is why the offering will be much different from promotions by other large server companies like IBM (IBM) and Hewlett-Packard (HPQ)? It has certainly not been lost on these firms that their customers need cheaper products, too. And it's nearly impossible to imagine that they're not already in the process of rolling out their own blue-plate specials.

If its largest competitors are likely to match Dell's discounting, then what?

Douglas A. McIntyre is an editor at 24/7 Wall St.

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