Dell snags PC server crown in US from Compaq

Compaq Computer Corp. is still the biggest server vendor in the world, according to a recent survey by Dataquest Inc. However, in the U.S., Dell has now taken the number-one position for server shipments for the first time, according to the same survey.

Dell has a 38.3 percent market share in the U.S. with 94,700 shipped PC servers during the first quarter this year, according to Dataquest, a unit of research company Gartner Group Inc. Compaq is second with a 32.3 percent market share and 79,900 shipped servers. Far behind is IBM Corp. with a 12.5 percent market share and 31,000 shipped servers followed by Hewlett-Packard Co. (HP) with a 7.9 percent market share and 19,600 shipped servers. The total number of Intel-based servers shipped in the U.S. during the first quarter was 247,500, according to Gartner.

The survey covered PC servers costing less than US$25,000 from manufacturers who make brand-name PCs.

Dell's success in the U.S. is a result of the vendor's direct sales model, said Rob Drew, country manager of ON Technologies Corp. and based in Heathrow, U.K.

"I want to talk to a decision maker when I buy a product," Drew said, adding that a decision maker is someone who manufactures the product.

"It's a channel issue. If I go to my Compaq partner to get the latest technology, do they have it in stock?" he said. "All technology is very similar nowadays, and it is time to market and first to market (that make the difference). If I ring up Compaq's reseller, he might have to first order what I want," Drew said. This will take longer than ordering directly from the vendor, he added.

ON Technologies is a Boston-based software company that develops a tool with which operating systems and other software can be implemented remotely. The company uses Dell servers in the U.K, Drew said.

Compaq traditionally uses a sales channel that can give extra service to end customers. Many users, who are not experts at installing IT equipment, need someone to handle installation for them and this is why many vendors still use distributors and resellers to both sell their products and install and maintain them for end customers.

Compaq is now taking measures to reduce inventory in its U.S. sales channel, which is why the vendor finds itself behind Dell in the Dataquest survey, according to Iain Stephen, server business manager at Compaq's U.K. office in Richmond, London.

"The figures from Dataquest represent the amount of servers sold by Compaq to our channel partners. We are encouraging our partners to buy less from us to reduce inventory levels," Stephen said. This means that the number of servers sold to end customers are not shown in the report. Compaq's server sales figures will be adjusted next quarter and will show a bigger sales growth, according to Stephen.

If many unsold products are staying in the channel, in distributors' warehouses or on resellers' shop shelves, there is always a risk that partners will try to make Compaq take the products back, according to Stephen. This is why Compaq is now encouraging its partners to buy fewer servers.

"In the U.S., about 25 percent of our (server) sales are direct and in the U.K. and Ireland, about 99 percent of our server sales are indirect," Stephen said. This figure is not likely to change unless "we have specific customer requests," he added, meaning that certain customers may be allowed to deal directly with Compaq if they specifically demand to do so.

Worldwide, Compaq is still the largest PC server vendor with a market share of 29 percent and 234,700 shipped servers during the first quarter this year, according to Dataquest. Dell is number two with a 21.6 percent market share and 174,700 servers shipped. IBM is again third with 13.9 percent market share and 113,000 servers shipped, and HP is fourth with 11.2 percent market share and 90,400 servers shipped of the total 810,000 PC servers shipped worldwide during the first quarter.

Dell recently also over took Compaq in worldwide PC sales for the first time. According to another study by Dataquest, Dell's first quarter PC market share was 12.8 percent worldwide compared to Compaq's 12.1 percent.

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