The Server Channel Is Going Strong, But Suppliers Must Be Open to Changing Business Models, IDC Says

FRAMINGHAM, MA — OCTOBER 2, 2000 — Those who think the server channel is dead or dying better think again. The server channel is going strong — in some cases, stronger than ever. According to IDC, much opportunity exists for channels, although the server market will have to overcome new challenges.

“The challenge is that new channels keep emerging,” said Janet Waxman, program director with IDC’s Systems and Storage Distribution Channels group. “Along with these emerging channels come different business models. The key is for vendors to choose the right type of channel while constantly assessing their partners and keeping a watchful eye on the market to ensure they are aligned with the right companies.”

According to IDC, indirect channel revenue will increase at a compound annual growth rate (CAGR) that is almost twice that of the direct channel. In terms of price band, a huge opportunity exists for the channels in the lower bands. In 1999, entry server sales accounted for 53% of all server revenue. By 2004, this percentage will inflate to 58%.

IDC says it is absolutely essential that server manufacturers work with existing and emerging channels to develop a collaborative model. One of the changing models is a greater shift toward the use of the Internet as a channel. With so many customers struggling to become “e-enabled,” the services opportunity and integration required are quite extensive, and customers are looking to the indirect channels for these solutions.

“Many industry watchers believed the Internet would be the final assault on the indirect channels,” Waxman said. “But the opposite is true. The Web has spawned many new businesses, some of which require the face-to-face selling that a channel partner can provide.”

Despite the hype about the Internet, other new technologies will present the server market with even greater challenges. Storage, for example, shows tremendous growth for the channel, and customers seeking a one-stop integration and support feature will be drawn to it.

“Those who understand the product as well as the customer segment that is being targeted and those who can articulate why the channel is required will be most successful,” Waxman said.

Information like the above can be found in IDC’s report Server Channel Forecast and Analysis, 1999–2004 (IDC #B22661). This report provides server distribution information useful for planning and forecasting market growth and penetration. Areas of greatest channel growth are identified. The report is divided into the following sections: a total server market overview, a detailed analysis and forecast of the major channel partners, an examination of the key challenges facing server vendors, and tables breaking out server market revenue and shipments. Customer revenue and unit data is split among 11 levels of pricing detail. Channel trends and highlights are reviewed according to seven operating system platforms. Further channel breakdown is provided for the units and revenue opportunity for two-tier distribution as well as the Internet-assisted and Internet-only channels.

To purchase the report, contact Patrick Steeves at 1-800-343-4952 at extension 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

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

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