The company is fitting higher quality components into servers and pushing virtualization to consolidate workloads that could help cut energy costs, Dell officials said in a meeting on Wednesday in San Francisco.

Historically, Dell has been known for selling servers at good value. The company is now willing to trade-in the price advantage to offer high-quality hardware that can balance server workloads and cut energy costs. That will help customers save money compared to vintage and low-cost servers that are not designed to run critical data-center applications, said Rick Becker, vice president of software and solutions at Dell.

Though server prices may increase, the improved hardware can pay for itself in three years, said Albert Esser, vice president of Dell's data center infrastructure group.

Instead of the typical seven-to-eight year refresh cycle, a two-to-three year cycle to upgrade hardware and service warranties could come into effect to take advantage of the latest server technologies , Esser said.

"It is very clear that refresh rates of three years ... the total cost of ownership is less than keeping your old machines running," Esser said. Old servers unable to distribute workloads could utilize excess power and lead to system administrators buying exponentially expensive servers to fill IT needs.