Asian Server Market Shatters Revenue Records In 1999, IDC Says.

According to preliminary results released by IDC, the Asia/Pacific (excluding Japan) server market produced record results in 1999, with the market surging past the $4 billion mark for the first time. In fact, overall server revenues increased 36 percent in 1999 to reach $4.67 billion, a total significantly higher than the previous record of $3.9 billion in 1997.

Market expansion was fuelled by sustained economic recovery across the region, increased spending on Internet-related applications and Y2K-driven spending that continued well into the fourth quarter. Further, the regional server market benefited from positive investment sentiment in the corporate and government segments.

PC servers and entry (small) servers provided the greatest accelerators in 1999 with annual growth rates of 68 percent and 34 percent, respectively. Customers reacted positively to the attractive price/performance improvements offered in the entry server category. High-end servers (servers priced above $1 million) grew marginally with a three percent annual revenue increase and were held back by a Y2K-related slowdown in this market segment. However, Unix-based high-end servers generated substantial revenue growth in 1999 due to the deployment of these servers in Internet and business intelligence environments.

"The continued year-over-year growth in server spending over the past four quarters of 1999 has reaffirmed the strong proliferation of information technology across the different markets and industries in this part of the world," says Avnet Saxon, manager of server research at IDC Asia/Pacific. "End users have fully realized the strategic advantages of having a robust information infrastructure. Servers will continue to play a pivotal role in the coming years as markets in Asia/Pacific gear up to the challenges of the new economy."

Competitively, vendor consolidation continued in Asia/Pacific (excluding Japan) with the top five vendors increasing their combined revenue share to 83 percent, up from 80 percent in 1998 and 76 percent in 1997. Strong RS/6000 and PC server growth enabled IBM to maintain its market share in 1999 from 1998, despite a sharp downturn in demand for its proprietary platforms caused by Y2K. Hewlett-Packard was assisted by a strong growth of 99 percent in its high-end server division and 59 percent in the PC server arena to grow by 36 percent overall in value terms and retain its number-two rank. Compaq's server business managed to grow faster than the overall market due to strong demand for high-performance Tandem servers and an improved focus on its Alpha servers. Although the top four vendors maintained their respective market rankings in 1999 from 1998, Sun Microsystems managed to further bridge the gap with Compaq, which ranked third in the market. Sun grew rapidly and gained share due to its aggressive marketing and strong mindshare in the Internet space. With more than a 200 percent increase in revenues in 1999 from 1998, Dell entered the top five server vendor rankings. Dell's exceptional performance stemmed from its investments and strong performance in the key markets of Australia and the PRC.