Compaq plans to sell its Prosignia server range direct to small and medium sized enterprises (SMEs) in a move which could once again upset its channel.
Independent research company Frost & Sullivan believes that Compaq's plan to sell direct to SMEs is an attempt to pump up volumes as plummeting prices for Lan servers fuel market growth - but that this is likely to alienate the vendor's channel partners.
Jan ten Sythoff, industry analyst at Frost & Sullivan, said: "This is a huge issue for Compaq. Dell is taking a lot of business and as Compaq promotes the Internet and ebusiness solutions it must walk as it talks."
"Compaq wants to increase volumes as prices fall by selling direct but it will have to be handled very carefully as its partners will feel they are being bypassed," he added.
Simon Griggs, UK Intel server manager, refused to confirm details of Compaq's plan but said: "SMEs have different buying criteria from corporates. An SME will buy a particular spec against specific pricing, but a corporate wanting a large IT rollout needs life cycle management. Our resellers do a great job in the corporate market space."
The announcement is expected from Compaq tommorrow about its plans for the SME market.
A recent report by Frost & Sullivan, The European Market for Lan Servers looked at all Intel based servers up to four way systems and some lower end Risc on Unix products.
It reveals that the Lan server market is set to grow by 8.3 per cent from total market revenue of $3.14 billion in 1998 to $5.49 billion by 2005.
"Falling Lan prices mean they are more accessible to SMEs. SMEs want to enjoy the benefits of a Lan, such as being able to share files instead of swapping floppy discs and having a shared printer," said Sythoff.
"Siemens and IBM will also want to expand their distribution channel to achieve growth," he added.
The report reveals that the Linux operating system is set to overtake Unix and Netware to become the number two operating system within the next few years. In 1998 Linux had six per cent of revenue and by 2001/2 it will grow to claim more than 20 per cent, with NT in the number one spot eating up more than 50 per cent of total market share.
Sythoff said that Linux's popularity will grow because, "until now it hasn't supported symmetrical multi-processing (SMP) so was restricted to uni-processors."
Overall market share for the uni-processor Lan server market will decline from 20 per cent in 1999 to 9.1 per cent in 2005. Dual processors machines will grow from 52.6 per cent of the market to 56.9 per cent and quad processors will enjoy the biggest growth, expanding share from 27.4 per cent to 32.2 per cent.
The quad-processor Lan server market is being fuelled by strong interest in ERP, customer relationship management (CRM) and online transaction processing (OLTP) applications, said the report.
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