4Q99 Worldwide Server Market Revenues Declined 6% from 4Q98, IDC Says

FRAMINGHAM, MASS., APRIL 11, 2000 – The latest quarterly server data from IDC indicates significant weakness in the worldwide market for servers for 4Q99. Figures from 4Q99 show total factory revenue declining 6% to $14.9 billion compared to 4Q98. A significant revenue weakness, due largely to Y2K, was felt throughout the market.

However, one bright spot occurred in the entry server market, which posted a modest gain of 2% to $7.9 billion in 4Q99 over 4Q98. The midrange and high-end server markets declined 6% and 27% to $4.5 billion and $2.5 billion, respectively.

"4Q99 was a weak quarter for the server market. The server market was mixed with Y2K system spending lockdown, price erosions, and product delays," said Hoang Nguyen, senior research analyst for IDC's Worldwide Quarterly Server Tracker.

4Q99 Worldwide Highlights

— Despite the weak quarter, the Asia/Pacific (excluding Japan) server market had robust growth of 40% to $1.4 billion from 4Q98.

— Japan's server market posted a sharp decline of 20% year over year as Y2K hit hard in its midrange and high-end markets and stopped any recovery momentum.

— Intel-based architecture systems continued to grow in the wake of the slowdown, posting a solid 6% growth year over year.

— The top-five server vendors earned 73% of the market's revenues, up from 67% in 4Q98 – pointing to continued consolidation in the market.

"It was particularly tough selling hardware in the quarter as many customers opted for stability prior to the potential pitfalls relating to the year 2000 date change," said Steve Josselyn, director of IDC's Commercial Systems and Servers research. "We believe this softness will carry over into the first half of this year due to redeployment of excess capacity and difficult comparisons with unseasonably strong sales from a year ago."

IDC defines the entry market as systems shipped with prices from $0 to $100K. The midrange market includes systems from $100,000 to $1 million, and the high-end market includes systems over $1 million.

IDC's Worldwide Quarterly Server Tracker is the premier quantitative tool for analyzing the global server market on a quarterly basis. The Worldwide Quarterly Server Tracker includes quarterly shipments (both ISS and upgrades) and revenues (both customer and factory), segmented by vendor, family, model, region, operating system, price band, CPU type and architecture.

To purchase the Worldwide Quarterly Server Tracker, contact Hoang Nguyen at 508-935-4718 or at hnguyen@idc.com. For more information on the Tracker, please visit http://www.idc.com/Data/Enterprise/factsheets/factsheets00/WWQtrlySrvrTrack.htm. IDC's Web site (http://www.idc.com) contains additional company information, recent news releases, and it offers full-text searching of the latest available research.

About IDC

IDC delivers dependable, relevant, and high-impact data and insight on information technology to help organizations make sound business and technology decisions. IDC forecasts worldwide IT markets and technology trends and analyzes IT products and vendors, using a combination of rigorous primary research and in-depth competitive analysis. IDC is committed to providing global research with local content through more than 500 analysts in 43 countries worldwide. IDC's customers comprise the world's leading IT suppliers, IT organizations, and the financial community. Additional information can be found at http://www.idc.com.

IDC is a division of International Data Group, the world's leading IT media, research, and exposition company.

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