Michael Dell is determined to conquer new markets as he grows his namesake company into a $60 billion business. But the quest to nearly double the size of the $35 billion-a-year computer-products vendor won't be easy. The company needs to keep increasing its market share in Intel-based PCs and servers, yet grab a greater piece of the market for handhelds, networking equipment, printers, and storage devices--things customers used to buy elsewhere and then attach to Dell PCs and servers.

It took Michael Dell from 1984, when he started his computer company in college, until 2001 to become the world's No. 1 PC maker. It now has around 18% of the worldwide PC market; Hewlett-Packard is No. 2 with about 16%. In the United States, Dell has a 31% market share compared with HP's 19%, research firm Gartner says. Dell became a major player in the server market more quickly. It launched a line of Intel-based servers in 1996 and now ships more than any other company, although HP and IBM, with their high-end Unix machines, are still the leaders in server revenue.

But Dell needs to succeed in new areas if it's to reach its ambitious growth goals. And it faces tough competitors: HP dominates the printer market, Cisco Systems owns the networking market, and other vendors sit on top of the markets for handhelds and storage devices. But Dell, which is famous for controlling every step of the product-development, manufacturing, and delivery process, has shown a willingness to adopt new tactics to penetrate new markets. It partnered with Cisco to enter the networking market but then turned on the market-leading networking company and offered a competitive product. It works with Lexmark International Inc. on printers and with EMC Corp. in storage. To highlight its shifting focus, the company changed its name in July from Dell Computer Corp. to Dell Inc.

Michael Dell sees plenty of room for growth. "As we look across the $800 billion IT market, there are lots of opportunities," he says. "The fastest-growing areas have been enterprise servers, storage, and services, not to mention some of the new areas--networking, printers, PDAs, and projectors."

Of course, Dell isn't ignoring PCs and servers. To boost sales of enterprise servers, Dell advocates a strategy he calls "scale out," which urges businesses to use clusters of low-cost Intel servers as the foundations of their IT infrastructures. "What we're talking about is aggregating all the computing power and being able to dynamically allocate resources amongst a pool of shared servers," Dell says. "Scale out is really leveraging the high-volume, industry-standard economics of microprocessor chip- sets, high-volume disk drives, and other components built in hundreds of millions of units per year to run large databases and applications."

That approach runs counter to the server-consolidation strategies of many companies. "We don't have a fear of adding capacity," says Mark Thomas, an IT director at Progressive Corp., "but we don't want to necessarily follow this [scale-out] model in the Intel environment." Progressive is the nation's third-largest seller of vehicle insurance and the top provider of motorcycle insurance, with $9 billion in sales last year.

Still, Progressive and Dell have a strong relationship. Progressive IT managers meet regularly with Randy Groves, VP and chief technology officer for Dell's product group, and other Dell executives to discuss product plans and technology needs. Over the past several years, Progressive has bought hundreds of Dell servers and PCs. Progressive's IT staff worries, however, that Dell's scale-out approach could create a proliferation of servers, which would increase management complexity and cost. "We've brought this up to them, and they say they're working on it," says Joe Self, director of Progressive's client enterprise.

Michael Dell argues that clusters of low-cost servers can do just about anything that larger, and more expensive, servers can do. Orange SA, a British telecommunications provider, in May moved its database of 13 million customers from a RISC-based Sun Microsystems platform to four Dell PowerEdge 6650 Xeon servers running Oracle9i and Red Hat Inc.'s Linux operating system.

The real growth for Dell, however, needs to come from newer markets, where the company will try to apply its highly efficient just-in-time manufacturing model to undercut competitors' prices. That approach invites rivals' criticism of Dell for failing to spend much on research and development and for not introducing innovative technology. Even customers, Progressive's Self among them, acknowledge that Dell isn't a technology leader. Instead, Self says, Dell skillfully plays a waiting game to determine when it should enter a market. "When you get their product, it's pretty well proven," he says.

That's just fine by Progressive, which uses Dell products to make sure its call-center workers get access to information from all channels, including the Web, E-mail, and phones. Claims adjusters use wireless devices that let them file reports from the field. "We rely on data to determine industry trends before our competitors do," Self says. "This has been particularly important since the insurance downturn of 2000."