IDC Expects Growing Demand For Low-Cost Servers As Businesses Continue To Curb Their IT Spending

FRAMINGHAM, MA – OCTOBER 11, 2002 – According to IDC's latest Quarterly Server Forecast, spending for the Standard Intel Architecture Server (SIAS) server market will grow to $5.0 Billion in Q3 2002, marking the first quarter this segment has shown growth since the beginning of 2001. However, IDC believes that enterprise spending for the worldwide server market will remain cautious and that any growth in the third quarter of 2002 will merely return the market to flat year-on-year growth.

 

In the U.S., IDC expects Q3 2002 spending to increase as much as 4.7% over Q3 2001, sparked by improving market conditions for low-end servers. Most volume server vendors reported strong sales in July and August as well as renewed request for quote and request for proposal activity across several vertical markets. While still facing some uncertainty, IDC believes that U.S. market conditions are slowly improving and should grow 8.6% sequentially over Q2

2002. However, any gains in the third and fourth quarters will be offset by a very weak first half, resulting in a decline of 9% in all of 2002 when compared to 2001.

"We are not saying that the server market has broken free from the economic freeze," said Vernon Turner, Group Vice President of Global Enterprise Server Solutions. "IT enterprises are buying only the minimum amount of incremental capacity to get the job done. But this represents the first step toward improving market conditions."

"While the U.S. and many of the emerging markets in Asia Pacific are beginning to fuel market growth, conservative spending in Latin America, Western Europe and Japan are conspiring to inhibit a stronger worldwide improvement in market conditions," added Mark Melenovsky, IDC's Program Director for Server and Infrastructure Hardware Research. "Additionally, customer demand has shifted substantially to buying smaller increments of infrastructure capacity, fueling growth in the volume server market and continuing to create a very aggressive pricing and competitive environment in the midrange and high-end segments."

In a longer term view, IDC forecasts the server market will achieve a compound annual growth rate of 3% over the next five years, representing a $63.4 billion opportunity in 2006. Major drivers are Linux hardware sales tripling to $6.5 billion in 2006 and Microsoft-based server platforms increasing by nearly $5 billion to $19 billion. While RISC-based systems will face greater competition from Linux and 64-bit volume server platforms, IDC expects them to increase their presence among high-end systems competing with proprietary mainframe technology and to contribute approximately $27.7 billion to the server industry by 2006.

IDC's Worldwide Quarterly Server Forecast is a quantitative tool for analyzing the future global server market on a quarterly basis. The Forecast includes quarterly shipments (both ISS and upgrades) and customer revenues segmented by region, operating system, price band, CPU type, form factor, and CPU capacity. For more product information, please contact Steve Josselyn at 508-935-4247 or sjosselyn@idc.com.

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 www.idc.com.

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

 

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