First Quarter U.S. Server Units Sold Through Direct Channels Up 40% Year Over Year, IDC Says

FRAMINGHAM, MA – July 13, 2004 – The recently published U.S. Server Channels Tracker reveals that the number of server units sold through direct channels grew 40% in the first quarter of 2004 compared with first quarter 2003, while sales through indirect channels grew at 9%. In terms of factory revenues, dollars from server sales through direct channels grew at 9.6% while revenues flowing through the indirect channels remained flat compared to the year ago quarter.

IDC further breaks down the direct channels into 'Traditional,' 'Internet Telesales,' or 'Direct Internet.' Indirect sales channel are broken down by the number of tiers involved in the sale, either ‘Single Tier’ or ‘Two Tier’. The top channels that customers continue to buy the most servers through are, respectively, Traditional direct channel and the Two Tier indirect channel. However, as year-over-year quarterly comparisons show, both these channels have lost channel market share for the past two quarters, while with Internet Telesales and Direct Internet direct channels and the Single Tier indirect channels have grown at rates of 20% and higher.

"The vendors' channel mix will continue to shift, based on the needs of the customers combined with the changing models of the partners themselves,” says Janet Waxman, vice president of Hardware Channels and Alliances research at IDC. “Key elements of this shift include the ability to leverage multiple routes to market and to be able to track those routes to market more efficiently through the use of advanced supply chain technology.”

US Channel Segments for the Top Vendors, First Quarter of 2004

Units

Direct Channels Indirect Channels

HP 38% 62%

IBM 63% 37%

Sun 21% 79%

Dell 66% 34%

Others 76% 24%

Factory Revenue

Direct Channels Indirect Channels

HP 49% 51%

IBM 62% 38%

Sun 35% 65%

Dell 80% 20%

Others 65% 35%

IDC's U.S. Quarterly Server Channel Tracker, May 2004

IDC's U.S. Quarterly Server Channel Tracker is a quantitative tool for analyzing what channels the United States server market is selling through on a quarterly basis. The 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.

For more information, please contact Caroline Luciano at 212-696-8044 or cluciano@idc.com.

About IDC

IDC is the premier global market intelligence and advisory firm in the information technology and telecommunications industries. We analyze and predict technology trends so that our clients can make strategic, fact-based decisions on IT purchases and business strategy. Over 700 IDC analysts in 50 countries provide local expertise and insights on technology markets. Business executives and IT managers have relied for 40 years on our advice to make decisions that contribute to the success of their organizations.

IDC is a subsidiary of IDG, the world’s leading technology media, research, and events company. Additional information can be found at www.idc.com.

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