Vendor revenues fall as Y2K slams servers: IDC

Entry and mid-range caught the flak while Web-hosting technology found the sweet spotRevenue growth in the high-end and mid-range server markets dropped in 1999, with analysts attributing the decline to reduced spending as a result of Y2K lockdown.

According to IDC, the high-end server market posted a revenue decline of 7 per cent, while mid-range server sales dropped 18 per cent.

This compares to entry server market revenues that escalated 13 per cent.

IDC's vice president of commercial systems and servers research, Vernon Turner, said declines are the result of a second-half slowdown in production and Y2K uncertainty.

"If you sold servers that could significantly interrupt any year 2000 integration or unit testing, then you lost out in 1999," he said.

"Likewise, if you provided any Web-hosting server technology, then you hit the sweet spot of the entire market."

The Y2K lockdown affected the high-end market and mid-range market much more dramatically than the low mid-range and entry server markets.

Turner said strong demand for entry servers was heightened by e-commerce, Internet and PC server desktop migration.

The high-end market, which includes servers priced above $1 million, suffered the biggest setback in 1999, with an 18 per cent revenue decrease.

The mid-range server market, which includes servers priced from $100,000 to $999,999, decreased overall in 1999 to $16.2 billion in factory revenue.

However, the top three vendors - Hewlett-Packard, IBM, and Sun Microsystems - increased market share and revenue for the same time period.

The entry server market, servers priced at less than $100,000, felt the least impact from the Y2K slowdown with a strong growth rate of nearly 13 per cent.

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