Gartner Dataquest Says Worldwide Workstation Shipments Decreased 15 Percent in the Second Quarter of 2001.

Business Editors

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

Despite Much Hype, Itanium-Based Workstations

Had Little Impact on the Market

The worldwide workstation market continued to shrink drastically in the second quarter of 2001 as worldwide shipments declined 15 percent over the second quarter of 2000, according to preliminary results from Dataquest Inc., a unit of Gartner, Inc. (NYSE: IT and ITB).

This was the third consecutive quarter of a shipment decline for the workstation industry. While the soft U.S. economy has impacted global workstation sales, analysts said this is not the only reason the workstation industry is declining.

"The decline in workstation sales has its roots in a market reality check following recent years' unnaturally high growth, especially in the entry-level IT workstation segment. Endless demand for branded workstations just doesn't exist in the market," said Pia Rieppo, principal analyst covering workstations for Gartner Dataquest's Computing Platform Worldwide group.

Dell was the only top-tier vendor to experience double-digit growth in the second quarter (see Table 1). IBM was the only other top-tier vendor, besides Dell, to increase its market share in the quarter.

Table 1
Preliminary Worldwide Workstation Vendor Unit Shipment Estimates
for 2Q01 (Units)
----------------------------------------------------------------------
                   2Q01     2Q01 Market    2Q00   2Q00 Market
Company         Shipments   Share(%)    Shipments Share(%)  Growth (%)
----------------------------------------------------------------------
Dell              108,532    31.5        95,126     23.6       14.1
Sun Microsystems   72,892    21.2        87,982     21.8      -17.2
IBM                44,517    12.9        44,318     11.0        0.4
Compaq             42,352    12.3        58,263     14.4      -27.3
Hewlett-Packard    38,162    11.1        66,124     16.4      -42.3
Others             38,125    11.1        51,702     12.8      -26.3
Total Market      344,580   100.0       403,515    100.0      -14.6
----------------------------------------------------------------------
Source: Gartner Dataquest (August 2001)

"While Dell had the highest growth in the quarter, for Dell the result is relatively poor since it halved its growth rate from the past few quarters," Rieppo said. "IBM did relatively well after the overhaul of the low-end systems pricing, but IBM faces potential disruption and momentum changes in the third quarter, as the workstation division will be moved to the enterprise servers division. HP lost share as it dealt with the reorganization of all workstations into a single product line up and changes in channel strategy."

The second quarter of 2001 saw the introduction of Itanium-based workstations. Despite high expectations, shipment volumes were negligible in the second quarter with the exception of HP, the codeveloper of Itanium's EPIC architecture.

"High-end workstation users that will most benefit from Itanium tend to be conservative and will likely wait for the platform and applications to mature," Rieppo said. "Therefore, we believe that Itanium-based workstations will likely remain a development platform until the next generation processor arrives next year."

While vendors have had to deal with organizational changes and the economy, Gartner Dataquest analysts said another challenge is that many end users feel the value proposition of low-end workstations differs little from that of PCs.

"Many workstation end users run low-end applications that may not benefit from workstation-class service and support, graphics cards or system scalability. The introduction of new technologies, such as Pentium 4 and Xeon, has not boosted the market," Rieppo said. "Some of the system vendors said that workstations target professional markets, whereby the application certification and workstation support have true value. In any case, 2001 will be a trying year for workstation vendors."

These results are preliminary. Final statistics will be available soon to clients of Gartner Dataquest's Workstations Quarterly Statistics Worldwide program. This program offers a comprehensive, global market information service that analyzes and documents the workstation industry. To subscribe to this programs, please call 800-419-DATA, or 408-468-8009.

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.