Dell and Microsoft have joined forces to produce servers pre-configured with the SQL Server database as a budget offering in the data warehouse appliance market.

Dell joins Hewlett-Packard, which introduced a similar line of data warehousing systems built on SQL Server at Microsoft's Business Intelligence Conference in May.

"Customers have choices, and I hope they take advantage of those choices," Tom Casey, Microsoft's general manager for SQL Server, said at the Professional Association for SQL Server user group's annual conference in Denver.

The bundled systems, which are available now, come in three configurations with 1TB, 2TB or 4TB of storage in Dell's PowerVault MD1000 disk enclosure. Each package includes a Dell PowerEdge server running SQL Server 2005 on top of Windows Server 2003. The list price is about $100,000 per terabyte of storage; thus, the 4TB package costs about $400,000.

Users will soon be able to get the Dell servers with Office PerformancePoint Server 2007, Microsoft's new performance management software, as an optional add-on, according to Casey. He also said that servers preconfigured with the upcoming SQL Server 2008 should be ready by the launch of the database upgrade, which is expected in next year's second quarter.

According to The OLAP Report, Microsoft is the leading vendor in the $5.7 billion global market for online analytical processing technology that supports the storage and analysis of historical data for business intelligence purposes.

Data warehouse appliances are hardware devices that come with a preconfigured stack of data management software and connectors to outside applications, as well as storage and network connectivity. Most appliance vendors claim to offer easy deployment as well as performance that can top the throughput of conventional database systems.

But Casey said that the server packages introduced by Dell and Microsoft are both less expensive and less "proprietary" than competing appliances, making them easier to manage and integrate with existing IT infrastructures.

"We're not forcing you to buy a black box," added Judy Chavis, an enterprise marketing director at Dell.

Jim Kobielus, an analyst at Current Analysis, said teaming up on the new servers was a good move. But he added that he thinks some of the vendors' claims are exaggerated.

Although some data warehouse appliance vendors, such as Netezza, offer relatively "closed" systems, most do not, Kobielus said. In addition, $100,000 per terabyte is "way too expensive" when compared with the pricing of vendors like Netezza, Datallegro and Dataupia, he said. Their appliances all cost between $10,000 and $20,000 per terabyte, according to Kobielus.

On the other hand, Kobielus said that cost of the Dell-Microsoft bundles are competitive and even attractive when compared with offerings from vendors such as Oracle and IBM.

But never fear: Prices are falling across the board, Kobielus said. "The appliance is becoming a commodity," he noted. "It's a horse race to see who can provide the cheapest price per terabyte."