Strong Unit Growth in Workstation Market in 1998 But Revenues Decline Slightly, According to IDC

Framingham, MA, January 19, 1999 – A newly released bulletin from International Data Corporation (IDC) entitled The Workstation Market, 1998: The Year in Review estimates total 1998 workstation shipments grew 22% over 1997, reaching 2.3 million. However, market revenues declined by 3% over last year, leveling off at $14.7 billion. Hewlett-Packard was the overall leader in unit shipments (21%), followed by Dell (16%). Sun was the overall leader in revenue (23%), followed very closely by Hewlett-Packard (22%). The total workstation market includes both Unix (traditional) and Windows NT (personal) workstations.

"The lower cost of high performance Intel-based Windows NT systems brought workstation capabilities to a much broader set of users than has historically been the case with Unix workstations. The result has been a significant increase in units ships, but a modest decline in overall workstation revenue," says Tom Copeland, Director for IDC's Workstation Research group.

For the second year in a row, the traditional (Unix) workstation market declined in both shipments and revenue, by 6% and 16% respectively over the previous year. Total shipments were 599,110 and total revenue was $7.9 billion. IDC believes the decline in shipments is attributable to decreased investment in Unix workstations by companies in the U.S. and Europe and by the economic problems in Asia, particularly in Japan. The additional revenue decline resulted from lower average selling prices due to increase competition from Windows NT workstations. With consolidation in the Unix workstation market, Sun, HP and IBM are now the strongest players. Sun leads in market share in both shipments (52%) and revenue (43%), well ahead of second place Hewlett-Packard (16% in units and 23% in revenue).

Windows NT-based workstation shipments ($1.7 million) grew by 36% over last year, and revenues ($6.8 billion) increased by 18% from last year. HP and Dell are in a virtual tie for first place in both units (22.8% and 22.3% respectively) and revenue (21.5% and 21.0%). The overall NT (personal) market data includes both branded NT workstations – those systems marketed explicitly as workstations – and non-branded workstations – high end desktops used as workstations.

Branded NT workstations – those systems marketed explicitly as workstations – showed exceptionally strong growth (98%) in units (to 776,206) and 60% in revenue (to $3.6 billion). The strong growth in branded NT workstations indicates the increased focus by the major PC vendors on the workstation segment. Hewlett-Packard was the market share leader in both units (40%) and revenue (34%), followed by Dell with 19% share in both units and revenue.

"With more branded NT workstations shipping than Unix workstations in 1998, NT is driving the growth in the workstation market. NT workstations have surpassed the start-up phase and have become mainstream in the workstation market," says Tom Copeland.

Key Data

• Personal (Windows NT) workstation shipments grew by 36% over last year, and revenues increased by 18% from last year. HP and Dell are in a virtual tie for first place in both units and revenue.

• Unit shipments of branded personal workstations surged 98% from last year, and revenues rocketed to 60% over last year. For the first time ever, branded personal workstations outshipped Unix workstations.

• Branded NT workstations represent 56% of the total (NT and Unix) branded workstations shipped, but only 32% of the revenue.

• With a 10% shipment growth over last year, Sun was the only vendor to increase Unix shipments in 1998. Sun now accounts for over 50% of the traditional workstations shipped.

• HP leads in total workstation units shipped worldwide with a share of 21%. Sun and HP are in a virtual tie in workstation revenue worldwide with 23.1% and 22.5% share, respectively. Looking ahead, IDC expects that big companies with large installed bases of Unix workstations will begin to move NT systems into their core application areas in 1999 and 2000. IDC notes that the transfer will be an arduous process that will take several years to complete. Nonetheless, the positive influences of emerging markets and PC upsizing will continue to feed NT growth as well.

For more information or to purchase this bulletin (#B17937), call Cheryl Toffel at 1-800-343-4952, ext. 4389. IDC's Web site (http://www.idc.com) contains additional company information, recent news releases, and offers full-text searching of the latest available research.

About IDC

International Data Corporation is the information technology industry's most comprehensive resource on worldwide IT markets, trends, products, vendors, and geographies. IDC provides data, analysis and advisory services to the world's leading IT suppliers as well as IS professionals in finance, insurance, entertainment, advertising, consumer goods and publishing. IDC's research and opinions are based on the results of more than 300,000 end-user surveys, in-depth competitive analysis, broad technology coverage, and strategic analysis. IDC is committed to providing global research with local content through its 500 analysts in more than 40 countries worldwide. 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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