PC Server Market Growth Restrained But
Rebound Expected For 1999, According to IDC
Gap Narrows Between Compaq and HP
Framingham, MA, January 18, 1999 -- A newly released PC Server Year-In-Review bulletin from
International Data Corporation (IDC) estimates that the worldwide PC server market experienced restrained
growth in 1998 with a year over year increase in revenue of just 8%. This modest increase demonstrates
markedly slower growth than in both 1997 and 1996, with growth rates of 42% and 50% respectively.
Amir Ahari, Senior Analyst for IDC's Commercial Systems and Servers program, says, "The revenue
slowdown has been mostly caused by a drop in average sales value and a slowdown in high-end PC
servers." He adds, "However, the rapid success of Dell is leading traditional indirect vendors to respond with
two distribution offerings, build-to-order facilities and on-line web sales. Compaq re-launched its
build-to-order program in the latter half of '98."
Top 4 Vendors: Revenue and Market Share
Compaq lost over 4 points of share from 1997 due to inventory overload in 1H98 and distractions
from the Digital merger. Compaq is still the leading PC server vendor with worldwide revenues of
$3.8 billion and 29% market share in 1998.
HP had an impressive year, retaining the second spot with 36% revenue growth over 1997 to reach
$1.7 billion in 1998 and capturing a 13% share of the market. HP committed significant resources
throughout the year to better educate its channel partners.
Dell made large strides with 76% growth over 1997 to reach a 13% market share. With $1.6 billion in
revenue, Dell is the fastest growing PC server company in the top ten. Dell's success is due to sales
over the web - where primarily volume consists of dual-capable servers.
IBM increased its revenues by a modest 5% over 1997 largely due to overflowing channel inventory
and a transition from the PC Server brand to Netfinity. IBM picks up the fourth spot with $1.5 billion
in worldwide PC server factory revenue and market share of 12%.
Although the PC server market underperformed in 1998 compared to previous years, the long term outlook
remains favorable, as the Xeon processor will give an added boost to the overall market. IDC believes that
other positive influences include increased sales of whitebox PC servers to small businesses and ISPs,
consolidation among second-tier vendors, and a recovery to the Japanese market. In 1999, IDC expects an
aggressive rebound to double digit growth in worldwide PC server factory revenue.
For more information or to purchase this bulletin (#B18102), 1998 PC Server Year-In-Review, call Cheryl
Toffel at 1-800-343-4952, ext. 4389. IDC's Web site (http://www.idc.com) contains additional company
information, recent news releases, and offers full-text searching of the latest available research.
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