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Dell moves up in workstation market

Dell bumps Compaq out of second place in the booming Intel/Windows NT workstation market during the third quarter, according to a study.

Dell Computer bumped Compaq Computer out of second place in the booming Intel/Windows NT workstation market during the third quarter, according to a study released today, while the overall lead of Sun Microsystems in workstation revenue continued to shrink.

The third quarter numbers from Dataquest reflect the effects that the growing popularity of workstations based around Intel/Windows NT are having on the overall market. As in the PC space, direct supplier Dell is growing faster than its competitors.

Dell shipped 20 percent of the Intel/Windows NT workstations in the third quarter of 1998, nearly doubling its market share of 11 percent a year ago. Compaq Computer, meanwhile, slipped from 34.1 percent to 17.3 percent.

At the same time, the surge in sales is eating into sales for Unix/RISC machines. Sun Microsystems, which only makes and sells Unix machines, still leads the workstation market in terms of revenue, but the gap it has enjoyed over Hewlett-Packard is contracting. Sun's workstation revenue from the third quarter of 1997 to the third quarter of 1998 declined by $95 million, while HP, which makes both types of workstations, grew by more than $80 million, estimated Dataquest.

In the Intel/NT workstation market, "Hewlett-Packard still dominates, with the battle for the No. 2 position being fast and furious," said Peter ffoulkes, a Dataquest analyst. Dell pushed into second place in the third quarter of 1998, its highest ranking to date.

Unix workstations still have a heavy presence in the workstation market, particularly in the higher-end models, where Intel/NT workstations can't keep up, ffoulkes said. In data-intensive tasks such as simulating airplanes or designing microchips, customers will spend the extra money for a Unix system, ffoulkes said. "High-end Unix systems can do things that Intel architecture/Windows NT can't do yet, or certainly not in the same degree," he said.

In the Unix market, Sun dominates, with more than half the workstation revenue as well as an aggressive and successful push to sell low-end Unix systems to compete with Intel/NT workstations.

Still, NT systems are moving in. "The trend is absolutely that Intel architecture/Windows NT will be the dominant player over time," ffoulkes said. "There's still more revenue on the Unix side, but the NT systems are catching up."

Windows NT workstation revenue grew 66 percent in the third quarter compared to the same quarter a year ago, while Unix workstation revenue declined 20 percent. In terms of unit shipments, Windows NT workstations increased 143 percent in the last year, while Unix workstation shipments increased 15 percent.

Silicon Graphics, a company that has lost ground in the workstation market, is adopting a different strategy than Unix-only by adding NT/Intel workstations to its product line. SGI saw its revenue decline by 23 percent in year-to-year comparisons. SGI will keep selling its Unix-based workstations, but the company's "dominant thrust" will be in the Intel/Windows NT market, ffoulkes said.

In terms of worldwide workstation revenue, Sun and HP have a huge lead over the next tier of vendors. In the third quarter of 1998, Sun had revenue of $743 million and HP had $689 million. Third place went to IBM, with $267 million in revenue.

Compaq was in fourth, with $209 million. Last year, Compaq reported $288 million in third quarter workstation revenue.

Intel is an investor in CNET: The Computer Network.