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More Hope For Desktop PC Market: Workstation Shipments Forecast To Jump

Some desktop PC niches are defying gravity as overall PC sales drop, and workstation PC sales are headed up in the fourth quarter.

More evidence the PC isn't dead yet comes from systems builders and OEM channel partners that said desktop PC workstation sales are set for robust growth in the fourth quarter despite an overall PC sales decline.

Driven by the recent release of Intel's beefy Haswell Xeon E5-1600 v3 processor, market research firm IDC also said it expects a spike in sales in the second half of 2014, creating new opportunities especially within the OEM channel market. The Xeon E5-1600 v3 is the workstation version of the CPU family the server version is E5-2600 V3.

"Workstations are the crème de la crème of PCs. They have better margins, better performance and a better market than its commodity PC cousin," said Todd Swank, senior director of product marketing at Equus Computer Systems, a Minneapolis-based systems builder that is readying the launch of several tower workstations this October. "With the release of of Intel's Xeon E5-1600 V3 chips for our workstation line, we expect to end the year on a high note," Swank said.

[Related: The 10 Coolest Laptops Of 2014 (So Far)]

Workstation growth bucks a bleak worldwide PC trend that, according to IDC, will experience a 3.7 percent shipment decline in the second quarter of 2014. IDC is forecasting the workstation market to grow nearly 17 percent in revenue from $6 billion in 2013 to $7 billion by 2018. That comes on the heels of back-to-back years of workstation revenue declines, according to IDC. In 2012, worldwide and U.S. workstation revenue declined 4.4 percent from $6.9 billion in 2011 to $6.6 billion in 2012.

Chasing after those dollars are nearly every OEM that have announced new workstations based on the new Xeon chips. Last week, Intel formally launched its latest Xeon family of server and workstation processors that boast as many as 18 cores, a 3-times performance boost and support for DDR4 memory.

Intel channel partners said that, unlike commodity PCs that barely leave room for a 2 percent profit margin, workstations can earn nearly 30 percent margins.

"These are workhorse systems that businesses need to spend money on. There is just no skimping on performance," said Lloyd Cohen, director of worldwide market analysis for IDC. Top sectors for workstations include engineering, digital content creation, software engineering and financial services, he said.

Another trend-busting reality is that hulking desktop workstations, not svelte mobile workstations, are enjoying stronger sales, Cohen said. Desktops represented 2.5 million shipments (or 74.2 percent), and mobile workstations represented 865,000 units shipped.

Cohen said that OEMs are seeing robust growth thanks, in part, to Apple's sagging market share in the high end of the PC space.

"There’s in excess of one million MacPros installed worldwide," Cohen said. "MacPro users [are becoming] increasingly disappointed by system performance and Apple's upgrade path, along with lack of certification that takes it out of the running for RFB government bidding. The MacPro user base of 1.2 million is vulnerable to erosion."

Workstation market share leader Hewlett-Packard revamped its portfolio of workstations with Z840, Z640 and Z440 desktops that ship with the newest Intel Xeon processors, and a choice of high-end Nvidia or AMD professional graphics cards. Lenovo and Dell have also announced high-end workstations that start shipping in October.

For the first half of 2014, Hewlett-Packard shipped the most workstations, capturing 44.1 percent of the market, compared to Dell with 37.2 percent and Lenovo with a 12.8 percent share.

"The workstation market has benefited some from the tailwinds of people upgrading from Windows XP," said Alex Herrera, senior analyst with Jon Peddie Research. "Certainly, Intel's Haswell chips are giving a lot of companies a reason to take a look at these workstations. Couple that with a better business outlook for buyers, and we are seeing steady incremental growth in the workstation market."

PUBLISHED SEPT. 18, 2014

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