You might want to read the article from QuikSand to JDN. Does the WSJ mention that Dell is a big player in this market? Is Dell gaining market share? I'm not sure. I skimmed article for information on SUNW,only---Mephisto
PS: You should read original article so that you can view tables properly.
To: +JDN (14454 )
From: +QwikSand
Tuesday, Feb 23 1999 7:26PM ET
Reply # of 14507
A dynamite article from the WSJ online. Can't post the link. It's complete except for one graphic that shows HP & Sun gaining server market share at IBM's expense, but while the entire market grows.
Regards,
--QwikSand
Computer Industry's Focus Shifts to Market for Servers
By DAVID P. HAMILTON
Staff Reporter of THE WALL STREET JOURNAL
The personal computer may still loom large in the public eye, but the
real battle for the future of computing increasingly lies in the market
for servers, the ubiquitous but little-seen computers that tie together
the world's networks.
Demand for servers is exploding because of the popularity of the
Internet and corporate networks that link employees, customers and
suppliers. Servers are poised to become even more pervasive as they
start to take on many of the software tasks now usually handled by
PCs. For instance, Microsoft Corp.'s Hotmail unit offers an e-mail
service on its Web servers that can replace a PC e-mail program.
Server Market Ramps Up-a
Forecast annual growth in server shipments
and revenue for 1999 to 2003:
Segment
Revenue Shipment
Entry +13.1% +18.8%
Midrange + 2.1 +10.4
Mainframe -12.0 - 4.6
Supercomputer + 6.0 + 7.7
Fastest-Growing Server Vendors
1998 market share and percentage-point gain from year
earlier:
Low High
end % Midrange % end %
market pt. market pt market pt.
share gain share gain share gain
Compaq 18.0% +2.0 7.4%-b +1.9-b -- --
Dell 7.0 +3.0 -- -- -- --
HP 12.0 0 23.0 +5.0 3.2% +1.3
IBM 21.0 +2.0 28.0 +1.0 37.2 +8.1
Sun 11.0 +2.0 13.0 +3.0 5.6 +2.6
a-Figures show compound annual growth rate
b-Includes 1998 acquisition of Digital Equipment Corp.
Servers already represent a big chunk of the global computer industry.
Market-research firm International Data Corp. estimates that
world-wide server sales last year amounted to $59 billion, or almost a
third of the size of the 1998 PC market. While that sales figure is
down 1.7% from the previous year, that is only because average
server prices are falling although demand has been skyrocketing.
That's particularly true at both extremes of the server market -- the
low end, where PC makers are stepping up a cut-rate attack with
servers that host departmental networks and run Microsoft's
Windows NT operating system on Intel Corp. microprocessors, and
the high end, where IBM and its competitors have slashed prices
repeatedly on the corporate data systems that used to be known as
mainframes. In 1998, for instance, IDC estimates that hardware
makers shipped 70% more computing power on high-end servers than
in the year before but saw revenue fall 0.9%.
High Margins
By contrast, profit margins in the midrange market, for servers that
can host popular Web sites and fairly extensive networks, remain
relatively high amid strong demand. International Business Machines
Corp., Sun Microsystems Inc. and Hewlett-Packard Co. appear to be
pulling ahead in that market. All three companies are also gaining
ground in the high end and holding their own or better at the low end.
For IBM, that required a strategic U-turn. Two years ago, Big Blue
belatedly realized that it spent too much time trying to sell its
customers on individual server lines -- it offers four -- and not
enough assembling packages of different IBM servers that could
deliver network services more flexibly. Refocusing its strategy
helped IBM stem two years of market-share losses, says IDC analyst
Steve Josselyn. In 1998, IBM held 28% of the midrange server market,
up one percentage point from a year earlier.
H-P, by contrast, continued a blistering assault on the market last
year. Thanks to a combination of technological prowess and a focus
on supporting popular corporate-management software such as SAP, H-P
jumped ahead five percentage points from a year earlier to a 23%
share. Analysts, however, say H-P has lost momentum this year.
Big Strides
Sun, too, continued to make big strides, gaining three percentage
points to reach a 13% share of the midrange market -- a major
achievement, given that it held a measly 2% share just three years
earlier. So quickly has Sun shifted its focus that last year, it
gained just over half of its $10 billion in revenue from servers and
only 30% from workstations, whereas the year before it was the other
way around, according to IDC estimates. Sun declines to confirm
those figures.
Sun has run up an early lead in the Internet server market, where
companies like both the reliability of Sun's equipment and the fact
that it is easy to add more Sun servers to an existing network
without interrupting service.
Smaller server makers, meanwhile, mostly lost ground last year.
Silicon Graphics Inc., NCR Corp. and Siemens AG's Siemens-Nixdorf
all saw sales and market share slip. The only other major midrange
server maker is Compaq Computer Corp., which, when counted together
with its recent acquisition, Digital Equipment Corp., held a 7.4%
share in 1998.
But competition among server makers tells only part of the story.
The server industry has long been fragmented into a hodgepodge of
different software and microprocessor standards, mostly because they
are used by a relatively small, sophisticated base of users that
haven't demanded standardization. PC titans Microsoft and Intel have
promised to launch a fresh offensive in the server market that might
bring about a commodization, or structural lowering, of server
prices based on economies of scale. Microsoft plans to unveil its
next version of Windows NT, now dubbed Windows 2000, later this
year, while Intel expects to release next year a hefty new
microprocessor aimed at the server market, code-named Merced.
Going on Defensive
That Wintel alliance has already taken a big bite out of both the
workstation and low-end server markets, and the threat of PC-style
economics in higher-end server markets has pushed IBM and H-P into
defensive strategies. IBM, which already sells NT servers, insists
that it will maintain its other three proprietary hardware and
software server lines. But it also makes plug-in boards that allow
users to run Windows NT on its AS/400 server, which usually runs a
proprietary IBM operating system.
H-P is going even further. Like IBM, it plans to offer Windows 2000
on existing systems that currently run only a popular server
operating system known as Unix. But it also has pledged to end
development of its proprietary microprocessor, the PARISC chip, by
2003, at which time it will emphasize use of Intel chips instead.
H-P helped develop the architecture of Merced in a joint venture
with Intel.
"We're saying, buy our Unix boxes and, in the future, we can make
them run NT," says Nick Earle, who heads up server marketing for
H-P.
Among the major server makers, only Sun plans to remain focused on a
homegrown operating system and microprocessor. "We want to be a
product company, not a broker" for Intel and Microsoft, says Greg
Papadopoulos, Sun's chief technology officer, adding that Sun
figures it can offer better performance and earn higher profits
using its own technology.
Intel and Microsoft won't find it easy to continue moving upstream.
Microsoft has already pushed back delivery of Windows 2000 by a
year, suggesting that the project has proved far more complex than
it anticipated. Similar doubts surround Intel's Merced chip, which
is also late.
Another wild card is the Linux operating system, which is
distributed for free over the Internet and maintained by a worldwide
network of software developers. While Linux has yet to make much
headway among big corporate buyers, many smaller Internet-based
businesses swear by it, with some predicting it could threaten
Windows NT at the low end. |
