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PC server computers booming

Market growth continued upwards at a rapid 35 percent in 1997, most coming from sales of two-processor systems in the $8,000 to $15,000 price range.

    Compaq (CPQ), Hewlett-Packard (HWP), and IBM (IBM) remain the companies to beat in the market for server computers using Intel processors, as overall market growth continued upwards at a rapid 35 percent in 1997, according to International Data Corporation (IDC).

    IDC issued a report today saying that vendors saw increasing revenues from "PC servers" even though overall shipment growth was modest. PC servers, as defined by IDC, are Intel-processor-based systems which are specifically built and sold as servers and sell for less than $25,000. They have historically been used as lower-end servers, for such tasks as handling printing operations, while Unix servers have been used in high-end roles, such as database applications.

    IDC estimates that the 1997 worldwide PC server market will exceed $10.5 billion in revenue on shipments of 1.75 million units. Growth was sparked by increased shipments to the small business market, as well as continuing purchases by information system departments at corporations. Most of the growth is coming from sales of two-processor systems in the $8,000 to $15,000 price range, the report states.

    Compaq remains the largest PC server vendor both in the U.S. and worldwide markets. IDC research analyst Amir Ahari says that the company garnered 35 percent of the revenues, compared with 12 percent for HP and 11 percent for IBM. Together with Dell's (DELL) six percent share and Digital's five percent share, the top five vendors gathered 69 percent of the PC server revenue.

    IDC's Ahari says Compaq has done a good job of using its economies of scale to move high-end server technology into mainstream markets.

    "Some of the [high-end server] technology from Tandem is creeping in to the lineup, and watered-down versions of Tandem's fault-tolerant technology should appear by the end of the first half of 1998," Ahari says.

    Recently acquired by Compaq, Tandem now serves as the high-end corporate "enterprise" computing arm of Compaq. Tandem offers technology that allows a number of servers to be strung together to form a single virtual server, a configuration known as "clustering." Clustering provides added reliability, referred to as "availability," since the servers in the cluster can back each other up if one of them goes down.

    HP and IBM could start to take away market share from Compaq in 1998, though, as both companies continue to market their experience with service and support gained in the market for mainframe-type computers, Ahari thinks.

    IBM, in particular, has focused in on PC servers as a source of growth. The company has extensive experience in designing high-end servers based on RISC processors, but until recently engineers for those systems didn't work with engineers who designed Intel-based systems.

    "The company reevaluated 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-add features and rich architecture features of high-end [Unix systems] into PC servers," Ahari said.

    IDC says Dell continued to experience a phenomenal growth in the PC server market, with an increase of 181 percent in terms of revenues.

    The list of the top ten vendors is rounded out by Siemens Nixdorf, Fujitsu, Acer, NEC, and Hitachi, respectively.