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Fortunes for Dell and Intel on the Rebound in Workstation Market, Reports Jon Peddie Research.

TIBURON, Calif. -- What a difference a year makes. Despite their dominance, workstation industry leaders Dell and Intel were in a tailspin 12 months ago, both steadily losing ground to their respective rivals HP and AMD. Jon Peddie Research (JPR) has completed market tabulations and analysis for Q3'06, and results point to a reversal in fortunes for both.

Overall, the workstation market showed continued strength, with vendors shipping roughly 623 thousand workstations, accounting for about $1.5 billion in revenue. Year-to-year, quarterly volume was up 17% and revenue up 10.5%. Results for the closely coupled professional graphics market were similarly stronger, with units up 37.3% to 869.1 thousand and revenue up 15.4% to $284.1 million.

Not surprisingly, Dell held on to its top position as workstation vendor, with a 41% market share (units). And Intel stayed dominant as the primary platform supplier, represented in roughly 92% of machines shipped.

A sigh of relief for Dell and Intel

But for both, it's the reversal of an unpleasant downward trend for which the third quarter of 2006 will hold fond memories. Just a year ago, performance for Intel's Xeon platform was looking ragged compared to AMD's, and the market leader was consistently flogged in the press. Dell was in a similar position, having itself tied its workstation products exclusively to Intel. But the long-awaited revamp of the Xeon platform in the spring began a turnaround for both.

"With the release of a much more competitive dual-socket platform in the second quarter, Xeon's share immediately began to improve," said Alex Herrera, JPR senior analyst and Workstation Report author. "And when Xeon regained market strength, so did Dell."

ATI's numbers drop, but too soon to measure impact of AMD acquisition

ATI's share of workstation graphics hardware declined in Q3 to 19.1%, down from 24.4% in the previous quarter, while Nvidia (77.8%) retained dominance in the market. The drop begged the question as to if -- and how much -- AMD's Q3 acquisition of ATI adversely affected the latter's market position.

While JPR certainly sees the risk that AMD ownership will negatively impact ATI's share in the Intel-dominated workstation space, using Q3 results as evidence is likely premature. "A quarter's results are usually indicative of factors like OEM decisions and orders made the quarter preceding," Herrera said, "and acquisition plans weren't made public until Q3 was already underway. Results from Q4'06 and beyond will be better indicators of the AMD effect on sales of ATI professional graphics, so stay tuned."

About the JPR Workstation Report

Now in its third year, JPR's Workstation Report - Professional Computing Markets and Technologies has established itself as the essential reference guide for hardware and software vendors and suppliers serving the workstation and professional graphics markets.

Subscribers to the JPR Workstation Report receive two in-depth reports per year providing a comprehensive analysis of the vendors and technologies driving the workstation platform. Clients also receive four quarterly reports detailing and analyzing market results for each calendar quarter. For information about purchasing the JPR Workstation Report, please call 415/435-9368 or visit Jon Peddie Research at http://www.jonpeddie.com.

Based in Tiburon, California, JPR provides consulting, research, and other specialized services to technology companies, including graphics development, multimedia for professional applications and consumer electronics, high-end computing, and Internet-access product development

EDITOR'S NOTE: Excerpts from the JPR Workstation Report and expert interviews are available on request.
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Date:Dec 14, 2006
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