Server Market: GartnerGroup's Dataquest Says Worldwide Server Industry Suffered 11 Percent Decline in the Second Quarter; New Dataquest Program Provides Quarterly Server Market Statistics - Industry Trend or Event

Edge: Work-Group Computing Report, Oct 12, 1998

The server industry endured the effects of the Asian economic crisis as worldwide server revenue approached $9.9 billion in the second quarter of 1998, an 11.2 percent decline from the same period last year, according to Dataquest Inc., a unit of Gartner Group, Inc.

Server revenue in the Asia/Pacific region declined 33 percent during the second quarter of this year, and server revenue in Japan dropped 31.6 percent versus the second quarter of 1997 (see Table 1).

"Most server OEMs experienced a falloff in sales during the second quarter, but keep in mind that the second quarter was a tough one for anyone with exposure in Asia," said Kimball Brown, vice president and chief analyst for Dataquest's Emerging Server Technologies Worldwide program.

Table 1
Worldwide Server Revenue Estimates by Region for Second Quarter 1998
(Millions of Dollars)
Region         Q2/97 Revenue     Q2/98 Revenue     Growth (%)
United States          4,240             3,987           -6.0
Western Europe         3,387             3,646            7.7
Asia/Pacific             968               641          -33.8
Japan                  1,694             1,159          -31.6
Canada                   251               181          -27.8
Rest of World            594               271          -54.3
Total                 11,134             9,885          -11.2
Source: Dataquest (October 1998)

IBM held onto the No. 1 position in the second quarter of 1998 despite a slight decline in market share versus the same period last year (see Table 2). Hewlett-Packard moved into the No. 2 position, and Compaq/Digital slipped into the No. 3 slot as its revenue declined more than 7 percent during the second quarter.

Table 2
Worldwide Server Revenue Estimates for Second Quarter 1998
(Millions of Dollars)
                 Q2/97 Q2/97 Market   Q2/98 Q2/98 Market Growth
Company        Revenue    Share (%) Revenue    Share (%)    (%)
IBM              3,135         28.2   2,626         26.6  -16.2
Hewlett-Packard  1,276         11.5   1,427         14.4   11.8
Compaq/Digital   1,432         12.9   1,329         13.4   -7.2
Sun Microsystems   844          7.6   1,157         11.7   37.0
Siemens Nixdorf    448          4.0     456          4.6    1.9
Others           3,999         35.9   2,890         29.2  -27.7
Total           11,134        100.0   9,885        100.0  -11.2
Note: Totals may not add to 100 percent due to rounding.
Source: Dataquest (October 1998)

"Entry level servers suffered from weakness in Asian markets and product transitions as the market shifted from Pentium Pro to Pentium II. The announcement of Xeon may have also contributed to the decline," Brown said.

"The mainframe segment suffered a large decline as problems in Japan and a transition in IBM's product line to the G5 processor caused some users to wait for the new systems due late in the third quarter."

Additional information on this market is available in Dataquest's Emerging Server Technologies Worldwide program. This program publishes quarterly data on the worldwide server industry. This program covers various segments of the server industry, such as Internet servers, thin clients, thin (appliance) servers, and the emerging storage/server area networks.

Detailed information on this program is available on Dataquest's Web site at http://www.gartner.com/dq/static/offer/programs/inws-ww.html.> "Internet standards and shifts in technologies such as fiber and wide area communications are having a profound impact on the $51 billion server market," Brown said. "This program provides clients with the information and analysis vital to the development of strategic business, marketing, and product plans and is key to understanding investment opportunities in the evolving server market."

To subscribe to this program, please call 800/419-DATA, or 408/468-8009. More information about Dataquest's programs, descriptions of recent research reports, and full text of press releases can be found on the Internet at http://www.dataquest.com.

Brown will provide additional analysis on the server industry during the upcoming GartnerGroup Symposium/ITxpo 98. This conference is the IT industry's largest, most comprehensive, and prestigious strategic planning event. GartnerGroup Symposium/ITxpo 98 will be held Oct. 12-16 in Lake Buena Vista, Fla.; Oct. 21-23 in Tokyo; Oct. 28-30 in Brisbane, Australia; and Nov. 2-5 in Cannes, France.

For more information, call 1-800/778-1997 or 1-203/316-6757, e-mail ashley.pearce@gartner.com, or visit the GartnerGroup Web site at www.gartner.com/events.> Founded in 1979, with headquarters in Stamford, Conn., GartnerGroup is at the center of a global community with more than 11,000 client organizations served by analysts in 80 locations worldwide. Additional information about the company is available on the Internet at http://www.gartner.com.