3Q Server Sales Down 30 Percent

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Worldwide server revenue was down 30 percent to $10.7 billion in the third quarter of 2001, compared with the same quarter a year ago, according to research firm IDC.

While the Intel-based server market held up well compared with previous quarters, the four-way and eight-way server and Unix server markets took big hits, said Mark Melenovsky, research manager for IDC's Internet Infrastructure Program.

Joel Gilberts, vice president of Manchester Technology, a Hauppauge, N.Y.-based solution provider, said the server market was down compared with 2000 in part because many clients postponed purchases. Gilberts said he expects the second half of this year to see a strong server recovery. "There's a point where clients can't put off purchases and expect to remain viable."

Melenovsky said the Intel-based server market declined largely because 2000 was a boom time for data-center building. But the bubble has burst, which makes recent figures look terrible, he said.

On the Unix side, vendors got hit hard during the quarter, with Sun Microsystems, in particular, off 51 percent in terms of revenue vs. the year-earlier quarter, Melenovsky said. "The vendors that invested in high-risk, high-return Internet data centers and telcos reaped the benefits in 2000 but since then have taken a hit."

The four-way and eight-way server markets declined substantially in the second and third quarters of 2001 vs. 2000, Melenovsky said, adding that he expects recovery soon.

"In any time of economic distress, customers tend to shoot for cost savings," he said. "So they are buying less-configured two-way servers. With an economic recovery, we expect four-way and eight-way sales to recover."

Gilberts said the four-way and eight-way server markets also fell because clients are waiting for Intel's Itanium processors to hit the market before committing to purchases.

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