A-P Server Market Reaches Record $2.9B in H1: IDC

Telecommunication expansion, Internet infrastructure expansion and electronic commerce investments were primarily responsible for spearheading the server market growth, IDC said in a report issued Thursday. The region's sustained economic recovery also helped sales, IDC said.

The entry-level (under $US100,000) server market showed strong revenue growth of 41 per cent in the period, with demand coming from government-led infrastructure projects, the telecommunications sector and Internet startups, according to IDC.

But the high-end (over $US1 million) server market contracted 4 per cent, following a surge of sales in this market in 1999 as part of year-2000 remediation efforts, IDC said.

The server market offers good margins for vendors, and the already strong competition will get fiercer later this year when 64-bit Intel Itanium-based servers arrive on the market, according to Rajnish Arora, senior analyst for the server market at IDC Asia-Pacific.

South Korea was the largest single market for servers, with a 30 per cent share, followed by China (21.3 per cent) and Australia (13.2 per cent). The South Korean market grew 92 percent over the previous year, driven by a booming economy, rapid expansion of the Internet market, and healthy government investments in IT, according to IDC.

IBM retained its market leadership, with strong sales of its RS/6000 systems offsetting slow growth for systems running IBM proprietary operating systems. Hewlett-Packard (HP) maintained second position ahead of Compaq Computer due to the aggressive positioning of HP's L-class servers, IDC said.

Sun Microsystems defied gloomy market predictions for its strategy of selling only Sparc-based servers running the Solaris operating system, largely due to the success of its "dot.com" marketing campaign, IDC said.

IDC is owned by International Data Group, the publisher of PC World.

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