Server Market Recovering, Still Below Projections

While the worldwide server market is still well below Dataquest's projected growth rate of 21 percent for 2000, the 11 percent increase was an improvement over growth in the first quarter of 2000, the firm said.

Worldwide server shipments totalled 955,412 units in the second quarter of this year, while workstation shipments reached 440,463 units, according to Dataquest.

Server market growth was primarily fueled by the demands of electronic business and the need for front-end Web servers -- the public servers through which most Internet users are routed -- the market research company said.

Dataquest attributes the growth in the workstation market to the further blurring of the line between high-end PCs and entry-level workstations. "The distinction between PCs and workstations has gotten much more poorly defined," said Pia Rieppo, principal analyst for workstations at Dataquest. "People who would have only considered PCs are now considering workstations... low-end workstations are being bought by PC users," she added.

Workstations tend to be used for more technical and design-oriented applications such as CAD (computer-aided design) and digital content creation, according to Dataquest's definition of the word.

The compound annual growth rate for Intel Corp.-based workstations, in units, is expected to top that of the Unix workstation market from 2000 to 2004, with 16.2 percent growth as opposed to a decline of 5.1 percent in the Unix workstation market, Rieppo said.

Sun and Dell topped the list for strongest growth in the server sector, with 70.5 percent growth and 36.2 percent growth respectively in terms of units shipped compared to the year-ago quarter. Compaq was the number one shipper of servers with a 29.3 percent market share, trailed by Dell with 14.1 percent and IBM with 13.7 percent.

As for workstations, Dell moved past Sun and Hewlett-Packard, with increased growth in units shipped of 76.7 percent compared to a year ago. Dell held the dominant workstation global market share of 22.7 percent, followed by Hewlett-Packard with 20.5 percent and Sun with 19.3 percent. While HP saw positive growth in workstations shipped of 11.2 percent, Sun saw a drop-off of 3.8 percent compared to the year-ago quarter.

"The only surprise was that the Dell growth (in the workstation market) was stronger than I expected," Rieppo said. Dell is "growing at a rate higher than expected for the Intel architecture platform" due to strong sales in entry-level workstations, she added.

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