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Technology Stocks : Semi Equipment Analysis -- Ignore unavailable to you. Want to Upgrade?

To: StanX Long who wrote (8900)	3/5/2003 10:24:34 PM
From: StanX Long	Respond to of 95639

Study: Server Market Shows Signs of Life Wed Mar 5, 1:48 PM ET story.news.yahoo.com James Maguire, www.NewsFactor.com In the fourth quarter of 2002, the server market saw its strongest quarterly sequential growth in three years, according to research firm IDC. Although revenue from server sales fell 5.2 percent to US$12.3 billion from the same quarter a year ago, fourth-quarter server sales jumped 15.2 percent from the third quarter. This healthy sequential growth, said IDC analyst Jean Bozman, "is a sign of assurance that the server market will return to more normal seasonal predictability later this year." But Forrester analyst Galen Schreck told NewsFactor that a number of factors will create downward pressure on server sales. Chiefly, he noted that "a lot of the software tools out there will help reap greater efficiency out of the [servers] we already have." Additionally, he said, "we have a quite a lot of slack in our infrastructure," noting that many companies are dramatically underutilizing their current capacity. Entry Level Although server revenues declined, total unit shipments rose in 2002, according to IDC. A total of 4.48 million server units were shipped last year, a 5 percent increase from 2001. Given that revenues were down while shipments were up, it is not surprising that sales of entry-level machines were strong in 2002. Shreck noted that "in the long term, smaller machines will become a more important part of the market." Companies will be able to get ever more use out of these entry-level boxes because of advances in software technology. Indeed, according to IDC, entry-level units were the chief driver of strong quarter-over-quarter sequential growth in 2002. The entry-level server market, consisting of servers priced at less than US$100,000, grew nearly 18 percent sequentially and nearly 14 percent year-over-year. "As customers demand richer technology configurations at lower price points, the entry market will continue to lead market growth as vendors focus on entry products to meet those demands," IDC's Bozman said. The Good News IDC identified the Linux (news - web sites) server market as "the brightest spot" of the fourth quarter, with a dramatic 41 percent jump from last year. However, the Linux server market remains small in comparison with the Unix (news - web sites) market. Total fourth-quarter Linux sales were $607 million, while sales of Unix servers totaled $5 billion.