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Thin-client market to fatten up, IDC says

Although businesses have been cold to thin clients amid a PC-driven computing market, the research firm predicts better times ahead for this segment of the hardware industry.

The market for thin clients--the term for network-based computing devices with no local storage--is expected to grow at an annual rate of 22.8 percent over the next five years, market researcher IDC predicted Wednesday.

Shipments of thin clients will reach 3.4 million units worldwide in 2007, up from just 1.5 million in 2003, IDC said. Sales of thin clients have been relatively weak, partly because most people need some extra level of functionality and partly because falling PC prices meant no cost advantage.

But the environment is changing. Last year, for example, Sun launched a project called Mad Hatter intended to outfit businesses with low-cost computing devices that run on Linux software and can be easily configured by IT administrators.

"Many companies are working to make the process of planning, deploying, configuring, transitioning and using thin clients much easier. If thin-client vendors can increase their percentage of the total PC market by even 1 percent, that would be a huge win for this lively market," Bob O'Donnell, research director of device technology at IDC, said in a statement.

A key area that is likely to drive this market is Web services applications, although the demand for the latter will likely be lower than had earlier been anticipated. Windows software is expected to remain dominant, although there will be a shift toward alternative operating systems, IDC said.

At the same time, IDC noted, the transition from desktop PCs to notebooks could hurt thin-client penetration in businesses. But dedicated marketing from major companies such as Hewlett-Packard is expected to increase awareness of thin clients over the next five years.

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