Attention on the Appliance Server Market Mounts, IDC Says

FRAMINGHAM, MA — DECEMBER 5, 2000 — Intel is rethinking its strategy for its NetStructure server appliance brand. According to IDC, instead of selling directly to end users, Intel will switch gears and sell to other equipment manufacturers (OEMs). Intel is apparently changing its strategy in response to increased activity in the appliance server market by more traditional vendors like Compaq, Dell, and IBM, which will bring Intel into direct competition with its traditional customer base.


"To avoid directly competing with its traditional customer base, Intel has brought its NetStructure strategy back in line with the rest of its business. Instead of selling directly to end users, Intel will sell its appliance servers through the traditional OEM channels," said John Humphreys, an analyst in IDC's Commercial Systems and Servers research program. "By focusing on an OEM sales model, Intel can avoid customer conflict and leverage one of the broadest product lines of Internet infrastructure hardware while taking a role as a developer and manufacturer of appliance technologies."

IDC believes Intel may have been planning a short stay in the branded appliance business all along. According to IDC, Intel wanted to bring industry attention to the appliance marketplace and increase overall adoption of appliances.

"Intel's direct customer sales approach in the appliance market was short and sweet," Humphreys said. "Intel's direct participation in the market focused attention on the space and brought about a lot more competition, which in turn has put pressure on server and networking companies to bring additional appliance products to market. This strategy to bring attention to this market was almost certainly always in Intel's plan."

IDC believes Intel will continue to generate acceptance of the appliance server market by working with branded and unbranded vendors to develop and market new appliance products and help expand these products further toward the network edge and the backend database.

IDC recently published Intel Shifts NetStructure Market Strategy (IDC #B23540). This bulletin analyzes how Intel's departure from the branded server market will impact the appliance market. To purchase the report, contact Patrick Steeves at 1-800-343-4952, ext. 6787 or at

About IDC

IDC is the foremost global market intelligence and advisory firm helping clients gain insight into technology and ebusiness trends to develop sound business strategies. Using a combination of rigorous primary research, in-depth analysis, and client interaction, IDC forecasts worldwide markets and trends to deliver dependable service and client advice. More than 700 analysts in 43 countries provide global research with local content. IDC's customers comprise the world's leading IT suppliers, IT organizations, ebusiness companies, and the financial community. Additional information can be found at

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