Gartner Dataquest Says U.S. Market Brings Down Worldwide Server Growth in Second Quarter 2001.

Business Editors/High Tech Writers

SAN JOSE, Calif.--(BUSINESS WIRE)--Aug. 2, 2001

Slower sales of higher-end, midrange systems in the United States and Western Europe held back worldwide server shipments to minimal growth in the second quarter of 2001.

The worldwide server market grew 0.7 percent, according to preliminary statistics by Dataquest Inc., a unit of Gartner, Inc. (NYSE: IT and ITB). Worldwide server shipments reached 973,784 units in the second quarter of 2001, up from 966,779 units in the second quarter of 2000.

Compaq remained in the top spot with 26.7 percent of the worldwide market, followed by Dell and IBM, garnering 18.0 percent and 16.7 percent of the market, respectively. While the market share positions of the top five worldwide vendors haven't changed, only Dell and IBM had positive year-over-year growth, 28 percent and 10 percent, respectively (see Table 1).

"The economic slowdown predominantly affected high-end enterprise systems. Customers began to cut back or defer purchases of expensive high-end server models and focused more on lower-priced systems," said Shahin Naftchi, senior analyst covering servers for Gartner Dataquest's Computing Platform Worldwide program.

Table 1
Preliminary Worldwide Server Unit Shipment Estimates for 2Q01 (Units)
------------------------- ------------------- -------------- ---------
                   2Q01   2Q01 Market  2Q00     2Q00 Market
               Shipments   Share(%)   Shipments  Share (%)  Growth (%)
Company
------------------------- --------- ------------ -------- ----------
Compaq           259,770      26.7      273,147     28.3       -4.9
Dell             175,218      18.0      136,577     14.1       28.3
IBM              162,596      16.7      147,285     15.2       10.4
Hewlett-Packard  103,291      10.6      115,580     12.0      -10.6
Sun Microsystems  62,288       6.4       73,635      7.6      -15.4
Others           210,621      21.6      220,555     22.8       -4.5
Total Market     973,784     100.0      966,779    100.0        0.7
------------------------- --------- ------------ -------- ----------
Source: Gartner Dataquest (August 2001)

The U.S. server market showed negative 11 percent growth, with shipments of 347,045 units in the second quarter of 2001, down from 390,951 units in the second quarter of 2000 (see Table 2). Dell and Compaq share the lead in the U.S. market with 28.5 percent of the market, followed by IBM, Sun and Hewlett-Packard with market share of 17.1 percent, 7.9 percent and 7.7 percent, respectively. IBM and Dell were the only vendors in the top five to experience growth in both the U.S. and worldwide markets.

"IBM's recent aggressive attacks on HP and Sun customers began to bear fruit for the company, while HP's continuing channel conflicts may have helped IBM's attacks become more successful," said Jeffrey Hewitt, principal analyst for Gartner Dataquest's Servers Worldwide program. "Sun's UltraSPARC III issues and current poor reputation for service and support hastened its decline and this shows that its incredible momentum from 2000 has dissolved for now."

Table 2
Preliminary U.S. Server Unit Shipment Estimates for 2Q01 (Units)
------------------------- ------ -------------- ------------------- --
                  2Q01    2Q01 Market  2Q00     2Q00 Market
Company        Shipments   Share (%)  Shipments Share (%)   Growth (%)
------------------------- ------ -------------- ------ ---------------
Dell              99,000     28.5       86,125     22.0      14.9
Compaq            98,968     28.5      133,520     34.2     -25.9
IBM               59,244     17.1       52,036     13.3      13.9
Sun Microsystems  27,344      7.9       34,508      8.8     -20.8
Hewlett-Packard   26,770      7.7       35,973      9.2     -25.6
Others            35,719     10.4       48,789     12.5     -26.8
Total Market     347,045    100.0      390,951    100.0     -11.2
------------------------- ------ -------------- ------ ---------
Source: Gartner Dataquest (August 2001)

These results are preliminary at this time. Final statistics will be available soon to clients of Gartner Dataquest's Servers Quarterly Statistics program. This program offers a comprehensive, global market information service that analyzes and documents the server industry. To subscribe to these programs, please call 408-468-8000.

Gartner Dataquest is the recognized leader in providing the high-technology and financial communities with market intelligence for the semiconductor, computer systems and peripherals, communications, document management, software and services sectors of the global information technology industry.

Gartner, Inc. is a research and advisory firm that helps more than 10,000 clients understand technology and drive business growth. Gartner's divisions consist of Gartner Research, Gartner Consulting, Gartner Measurement and Gartner Events. Founded in 1979, Gartner, Inc. is headquartered in Stamford, Connecticut and consists of 4,600 associates, including 1,400 research analysts and consultants, in more than 80 locations worldwide. The company achieved fiscal 2000 revenue of $859 million. For more information, visit www.gartner.com.