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IDC: Y2K Weakens Server Market Revenues in 3Q99

The server market slowed in the third quarter of 1999, perhaps as a result of Y2K concerns, according to the market research firm International Data Corporation.

IDC's (www.idc.com) Worldwide Quarterly Server Tracker, a quarterly report of the global server market, indicates that global server market revenue has dropped to $13.5 billion, a 10 percent dip from the year ago quarter. The United States market declined a more gradual 3 percent from the same quarter in 1998, dropping to $5.2 billion.

IDC suggests that the decline in revenue is a result of a drop-off in sales of high-end systems. "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," Hoang Nguyen, research analyst for IDC's Worldwide Quarterly Server Tracker, said in a statement. Nguyen expects the market slowdown to continue into the first of months of 2000 as IT departments recover from Y2K and begin to focus their energies into future purchasing decisions.

Despite the overall decline of server revenue, the entry server class grew significantly in the last quarter as e-commerce and other Internet needs spurred the purchase of these servers.

The segment expanded 12 percent to $7.2 billion, making it the strongest sector of the market.

Among individual vendors, Compaq Computer Corp. (www.compaq.com) grew 9 percent to $1.9 billion, a respectable showing in light of recent reorganization trauma.

Strong sales in the Hewlett-Packard Co. (www.hp.com) Netserver family boosted HP's revenue modestly.

Outpacing the market, Dell Computer Corp. (www.dell.com) and Sun Microsystems Inc. (www.sun.com) each grew at year-over-year rates of 40 percent and 18 percent.--Christopher McConnell

About the Author

Scott Bekker is editor in chief of Redmond Channel Partner magazine.

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