Dell's entry into servers had several purposes. The use of servers by corporate customers was growing rapidly. The margins on servers were large. Moreover, purchase price was not as significant a factor in selecting which brand of server to buy because servers required far more in the way of service, support, and software. Several of Dell's rivals, most notably Compaq, were using their big margins on server sales to subsidize price cuts on desktops and notebooks in an attempt to win corporate PC accounts away from Dell. According to Michael Dell, "To neutralize that, Dell needs to be in the server market." The company expected that sales of servers would grow to about 50 percent of corporate revenues by 2001.
Dell's build-to-order and sell-direct strategies gave it a significant pricing advantage over rivals. Servers from such competitors as Compaq, IBM, and Hewlett-Packard,