Worldwide Server Market Revenues Weak in 3Q99 Due to Y2K Impact, According to IDC

FRAMINGHAM, Mass., Dec. 27 — The latest quarterly server data from International Data Corporation (IDC) indicates significant weakness in the worldwide server market in 3Q99. That quarter's figures indicate a total factory revenue decline of 10%, as compared to 3Q98, to $13.5 billion. A significant revenue drop-off in high-end systems, due largely to Y2K, led the decline.

In 3Q99, the Western European server market declined 19% in revenues over the same quarter a year ago to $3.5 billion, while the Japanese market declined 7% over the same period. Server factory revenues in the United States declined 3% from 3Q98 to 3Q99 for a total of $5.2 billion. However, Asia/Pacific is gaining steam as its server revenues grew 21% to $1.0 billion in 3Q99.

3Q99 Worldwide Highlights

The entry server class had robust growth in the wake of the worldwide market slowdown. The entry server class grew 12% to $7.2 billion as companies tried to establish the necessary infrastructure for increased ecommerce and Internet-related activities.

Compaq had impressive growth of 9% to $1.9 billion in light of the past management reorganization.

Hewlett-Packard posted modest revenue gains in the United States, owing to strong sales of the NETSERVER product family, and modest improvements in the 9000 family.

Market shares in Japan revealed steep revenue declines from local vendors Fujitsu and NEC, which both lost ground to American competitors IBM and Sun Microsystems with 10% and 27% growth in the region, respectively.

Dell and Sun Microsystems both outpaced the weakened market with 40% and 18% year-over-year worldwide growth, respectively.

The top five server vendors earned 71% of the total server market revenues, up from 67% in Q398, which demonstrates continued consolidation in the market.

"The 3Q99 revenue decline was led by high-end systems as companies suspended system capital purchases to wait for the turning of the new year," said Hoang Nguyen, research analyst for IDC's Worldwide Quarterly Server Tracker. "The current trends of market slowdown will linger into the first several months of 2000 as IT shops recover from Y2K and reestablish plans for systems purchases."

IDC's Worldwide Quarterly Server 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, and channel.

To purchase the Worldwide Quarterly Server Tracker, contact Hoang Nguyen at 508-935-4718 or at hnguyen@idc.com.

About IDC

IDC delivers dependable, relevant, and high-impact data and insight on information technology to help organizations make sound business and technology decisions. IDC forecasts worldwide IT markets and technology trends and analyzes IT products and vendors, using a combination of rigorous primary research and in-depth competitive analysis. IDC is committed to providing global research with local content through more than 500 analysts in 42 countries worldwide. IDC's customers comprise the world's leading IT suppliers, IT organizations, and the financial community. Additional information can be found 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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