Appliance Servers Make It to the Big Leagues: IDC Expects Over 2 Million Shipments by 2003

FRAMINGHAM, Mass., September 8, 1999 — Only two years after their debut, appliance servers are taking the server market by storm and threatening the space of multipurpose servers. International Data Corporation (IDC) reports more than 2 million appliance servers will ship by 2003, generating revenues of nearly $8 billion.

"Appliance servers' ease of use, manageability, and better price/performance offerings are very attractive selling points," said Vernon Turner, vice president of IDC's Commercial Systems and Servers research program. "This market could be a significant threat to the existing second tier or third tier of server vendors and kick off another wave of industry consolidation. After all, the smell of eight billion dollars of new revenue will attract just about everyone to the dance floor."

Small offices, home-offices, medium-sized businesses, Internet service providers (ISPs), and application service providers (ASPs) will turn to lower-end appliance servers instead of general-purpose servers because they can do the same work more reliably for less money. Large companies will use high-end appliance servers to simplify their hardware structure and manageability requirements.

According to IDC, because of the diverse target audience, competition within the appliance server market will be fierce, and no single company will dominate the overall market, just segments.

"Distribution and the right operating system fit will be critical for vendors in this market. The key will be finding the path that leads to ISPs and ASPs," said Amir Ahari, manager for IDC's Commercial Systems and Servers entry server program. "Additionally, successful appliance servers should be operating system impartial."

Nevertheless, IDC believes Linux has a good chance of becoming the dominant appliance server OS because of its strength as a developer platform and lack of license fees.

IDC expects the appliance server market to have cannibalistic tendencies at first, meaning taking business away from the traditional server products. However, over the long run, appliance servers will become additive, and they will be complementary to traditional servers.

IDC's bulletin, Appliance Server Forecast: Get It or Get Out of the Way (IDC #B20230), includes a worldwide shipment and revenue forecast through 2003, segmented by price band. The bulletin examines market drivers and inhibitors, target audience, the best approaches to the market, distribution, and these devices' effect on the server market. Additionally, it looks at some of the market's current players. For more information, please contact Janis Dempsey at 1-800-343-4952 extension 4145. For more information on IDC?s Commercial Systems and Servers research program, please visit http://www.idc.com/Data/Enterprise/factsheets/css_.htm.

About IDC

International Data Corporation delivers accurate, 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 adoption 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 more than 40 countries worldwide. IDC's customers comprise the world's leading IT suppliers, IT organizations, and the financial community. Additional information on IDC can be found on its Web site 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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