Servers based on Intel microprocessors and running the Windows operating system grew at a remarkable pace in the third quarter, according to recently compiled figures from from International Data Corporation.
While market leader Compaq's server sales grew a sturdy 54 percent during the third quarter, the company actually lost domestic and worldwide market share to Dell, IBM, and others who experienced triple-digit growth in some markets.
IDC's figures reflect the boom times and intense competition in the server world, which appears to be following the same pattern as the desktop market. That is, the name players are gaining faster than the market as a whole, and are beginning to compete more with each other.
Overall, the worldwide server market grew at a 43 percent rate, for instance, slower than Compaq's growth. Still, Compaq lost ground to its competitors.
"The market is getting a lot more crowded," said Amir Ahari, research analyst at IDC. "If you look at the shipments, HP is nearly doubling in sales and Dell is quadrupling."
"Two-way" (two-processor) servers were the big sellers during the quarter, especially those with Pentium II chips, Ahari said. Previously, Pentium IIs were not much used in servers because Intel had not yet added high-quality Error Correcting Cache (ECC) memory.
Single-processor servers, on the other hand, appear to be on the decline because they do not provide the fail-safe capabilities organizations need for the increasing amount of Web-based work.
Compaq remained the server market leader both domestically and internationally. Compaq's server sales, which topped 140,000 units for the quarter, are more than double any competitor's. Sales also increased sequentially.
Nonetheless, domestic market share slipped from 39.5 percent in the third quarter of 1996 to 35.5 percent for the quarter just ended, while international market share went from 32.1 percent to 31.5 percent.
Meanwhile, Dell, which was tied with IBM for the No. 2 spot domestically, went from a 5 percent market share to a 13.6 percent share. Worldwide, Dell was the No. 4 vendor, but saw its share go from 3.2 percent to 8.1 percent. Worldwide shipments soared form 10,115 to 35,922.
IBM also showed strong gains. IBM's domestic market share grew from 9.5 percent to 13.6 percent, reflecting a unit growth of 145 percent on a year-by-year basis. Internationally, the company was second, and saw its market share grow from 10.8 percent to 13.3 percent.
Hewlett-Packard saw its worldwide market share grow and its domestic share shrink slightly. HP went from a 12.1 percent share worldwide to a 12.6 percent share through shipping of 56,061 units worldwide. Domestically, HP's market share went from 13.6 percent to 13.3 percent. Unit sales, however, grew by close to 10,000, to 24,000 units. HP ranked third worldwide and fourth domestically.
Digital, which ranked fifth worldwide and domestically, and enjoyed both unit growth and market share growth. Domestically, Digital's share went from 2 percent to 3.5 percent, while internationally the company climbed from 3.9 percent to 4.4 percent.