PC servers drove revenue growth in the server market last year, shooting up by more than 35 per cent.
Figures from researchers IDC indicate that the worldwide market is being led from the bottom, with PC server sales the fastest growing sector, exceeding $10.5 billion on shipments of $1.75 million units.
The growth in PC sales outperforms the rest of the entry level market - which grew by only 19 per cent overall - and dwarfs the higher end sectors. Midrange server revenues rose by just two per cent and the high end market actually declined by four per cent.
PC servers are defined by IDC as systems based on Intel or compatible processors, which are specifically built as servers and retail for under $25,000.
The impressive growth is attributed to increased demand from small businesses, popularity of NT and continuing purchases by corporate IT departments. The biggest growth area within the sector came from sales of two-processor systems in the $8,000 to $15,000 price bracket.
Regionally, the US had the major share of the market in 1997, accounting for more than one-third of worldwide PC server sales. Western Europe also showed promising growth as NT adoption increased acceptance of PC servers. But Japan had a slow second quarter which, according to IDC analyst Amir Ahari, was largely due to a Japanese tax law enacted in April that raised prices on computer products.
According to Ahari, Compaq dominated the sector in 1997 with 35 per cent of revenues, compared to 12 per cent for HP and 11 per cent for IBM. Although Dell?s share is only six per cent, the company has continued to experience massive growth in the sector, with revenues increasing by 181 per cent.
Ahari believes that IBM and HP could start to encroach on Compaq in 1998 as they continue to market their experience with service and support gained in the market for mainframe-type computers.
IBM in particular has targeted PC servers as a source of growth by uniting engineers working on high end servers and Intel based systems. ?The company re-evaluated the potential growth in Intel-based systems and really started mixing the synergies between the two engineering groups to come up with ways to offer value added and rich architecture features of high end systems into PC servers,? said Ahari.
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