The PC server market grew by only 8% in 1998, but will be boosted in 1999 by sales of Intel's Xeon processor, according to the latest figures from IDC.
The market research firm's report, "PC Server Year in Review," also shows that Compaq's market leadership diminished last year, though it still held on to pole position.
Amir Amahrai, senior analyst at IDC's commercial systems and servers group, said: "The revenue slowdown has been mostly caused by a drop in average sales value and a slowdown in high-end PC servers."
The slowdown in sales has been marked: growth rates in 1997 and 1996 were 42% and 50% respectively.
Although the market underperformed in 1998, Amahrai believes the long term outlook is favourable because of Intel's Xeon processor. He identified other positive influences as increased sales of white box PC servers to small businesses and Internet Service Providers, consolidation among smaller vendors, and a recovery in the Japanese market.
In 1999, Amahrai predicts that worldwide PC server revenue will rebound aggressively to double digit growth.
Compaq, still the number one PC server vendor, lost 4% of its market share in 1998. The company blamed inventory overload in the first quarter and what it described as "distractions" based on its acquisition of Digital.
Hewlett-Packard retained second place, showing a 26% sales growth compared with 1997. It now owns 13% of the market.
But the fastest growing PC server company in IDC's top 10 was Dell, which saw revenue growth of 76% to $1.6 billion (#0.96 billion). The company achieved a 13% share of the market, only fractionally behind HP.
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