IDC Forecasts Appliance Server Market Explosion - Industry Trend or Event

ENT, April 12, 2000

The worldwide appliance server market is expanding at breakneck speed. A report from analyst house IDC (www.idc.com) estimates that this market will develop into an $11 billion industry by 2004. The appliance server market was significantly under $1 billion in 1999.

Appliance servers will be adopted by both enterprises and small businesses, but for different reasons. "Today's service providers and dot-coms are demanding reliable and scalable solutions to provide dedicated functions for their organizations. Alternatively, many small offices and businesses are looking for inexpensive, reliable ways to build a network and to get their business connected to the Internet," says Mark Melenovsky, research manager at IDC's Worldwide Commercial Systems and Servers research program.

IDC warns that the explosive growth of the appliance server space will come at a cost. Portions of the appliance market will cannibalize the traditional space. Additionally, general-purpose server vendors will begin customizing parts of their traditional server offering, effectively turning their machines into appliance servers.

According to the IDC report, Solutions in a Box: Appliance Servers Shake Up the Server Community, network attached storage will represent the largest opportunity for appliance servers, accounting for more than half the market's value through 2004. Revenue in the Web server segment, however, will increase the fastest. The compound annual growth rate (CAGR) in this segment will be more than 130 percent, compared with a 73 percent CAGR for the overall market.