Paul, IDC article about servers, not very encouraging except for 3 areas mentioned: Linux, mainframes and McKinley. Decent Linux sales should be good for Intel, one reason AMD would like to get their server act in order. Mainframes are no help of course, but, side note, they don't go away, like a deadbeat uncle. Finally, for McKinley, check out this IDC estimate:
Importantly, the ‘WinTel’ market may finally benefit from Intel’s hard-earned efforts to market its 64-bit chip architecture. IDC forecasts that the McKinley version of Intel’s Itanium Processor Family (IPF) will provide approximately $500M of new revenues in 2002, while all other chip architectures will remain depressed. This could provide a springboard for Intel’s business partners in 2003 – particularly for those that are selling into the Entry Server market.
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Few Bright Spots In The Server Market Over The Next Two Years
Jan 2002 Doc #VWP000079 Viewpoint
by Vernon Turner
Group Vice President, Global Enterprise Server Solutions
Team: Servers
In 2000, the server industry appeared to have gotten its business model right. In a time of continued price erosion, server vendors were able to maintain their revenues with more sales by launching innovative products across multiple operating-system environments. However, the current economic and political environment has put the market into a quick reverse—directly impacting many vendors’ operating results. IDC has believed that the strongest suppliers would maintain a first or second-place standing in server-market segments. For the next tier, the combination of lower prices, lower revenues and lower unit shipments has the potential to force vendors to undergo mergers, acquisitions or exits from the server market. Today’s most recent market forecast and analysis indicates that 2002 will be a major transition year for all server vendors. Overall, IDC expects that server revenue will decline by 7% in 2001 and that it will show a further 1% decline in 2002. The forecast also expects an eventual recovery in 2003, with revenues rising 6% over the previous year.
Within the revised forecast there are several key messages. First, it appears that there could be a couple of winners in the outbound years. The forecast shows that the Linux server market will actually increase in terms of revenues and server unit sales in 2001 and 2002. Much of the activity will happen in servers priced less than $6K. Additionally, the traditional mainframe market (today represented by IBM G-Series and zSeries servers) appears to be resistant to the market conditions and appears to be holding its own in terms of revenue and unit sales. These points may reflect the progress that Linux has made in the very low end of the server market, and the renewed interest that IT managers have placed on the apparent advantages of the ‘mainframe’ (e.g. server consolidation).
Importantly, the ‘WinTel’ market may finally benefit from Intel’s hard-earned efforts to market its 64-bit chip architecture. IDC forecasts that the McKinley version of Intel’s Itanium Processor Family (IPF) will provide approximately $500M of new revenues in 2002, while all other chip architectures will remain depressed. This could provide a springboard for Intel’s business partners in 2003 – particularly for those that are selling into the Entry Server market.
Despite the year-over-year decline in the server market, it remains a very attractive industry for those vendors that can execute on their supply-chain logistics, that have the ability to differentiate in a commodity-based market, and that can provide added value services to the customer. More recently, Unix-based vendors appear to have been able to sustain their market share based on the above criterion. However, long term viability of server vendors will be their ability to deliver on innovative technology balanced with application solutions at a competitive price.
Tony |
