Gartner Dataquest Says Worldwide Workstation Revenue Declined 13 Percent in 2000

SAN JOSE, Calif., March 12, 2001 — Workstation vendors are faced with the challenge of competing in a much more saturated market, and, as a result, worldwide workstation revenue in 2000 declined 13 percent from 1999, totaling $8.6 billion in 2000, according to Dataquest Inc., a unit of Gartner, Inc. (NYSE: IT and ITB). The industry's growth area for shipments has been in Intel-architecture (IA) workstations, for which shipments increased 19 percent, but this has not translated into strong revenue growth for the industry because of the ongoing decline in average system prices.

"Aggressive growth of the IA-NT workstation market and convergence of the technologies has led to a blurred distinction between PCs and workstations," said Pia Rieppo, principal analyst covering workstations for Gartner Dataquest's Computing Platform Worldwide group. "Navigating this no-man's land will be the biggest challenge the workstation vendors face in the near future."

Despite its decline of worldwide workstation revenue of 10 percent, Hewlett-Packard was the No. 1 vendor in the market (see Table 1). Dell was the only top-tier vendor to experience positive growth in 2000, as its revenue increased 41 percent over 1999 results.

Table 1
Worldwide Workstation Vendor Revenue Estimates for 2000 (Millions of Dollars)
Company 2000
2000 Market
Share (%)
1999 Market
Share (%)
Growth (%)
HP 2,024 23.5 2,244 22.8 -10.0
Sun 1,939 22.5 2,632 26.7 -26.3
Dell 1,459 16.9 1,032 10.5 41.3
Compaq 948 11.0 953 9.7 -0.6
IBM 938 10.9 1,347 13.7 -30.4
Others 1,314 15.2 1,648 16.7 -20.3
Total Market 8,622 100.0 9,857 100.0 -12.5
Source: Gartner Dataquest (March 2001)

"Success of the direct channel, as evidenced by Dell's strong performance, forced many of the vendors to aggressively push forward with new, somewhat unfamiliar business models. This requires significant internal resources and restructuring," Ms. Rieppo said. "PC go-to-market strategies lead to a major dilemma of how to balance solution-centric sales at the high end and the high-volume play at the low end. As a result, many vendors continue to struggle with where to position workstations internally — with PCs or with servers."

"The 2000 workstation results do not bode well for 2001," said Shahin Naftchi, senior analyst covering servers and workstations for Gartner Dataquest's Computing Platform Worldwide group. "In 2000, the United States and Western Europe accounted for 74 percent of the workstation revenue, but both of these locations are facing sluggish sales. In fact, while all other regions grew in 2000, shipments in Europe declined by 6.7 percent from 1999.

"Vendors will have to redirect their attention elsewhere," Ms. Rieppo said. "The problem is, many of the other countries are much smaller, so sales in those areas will not offset the revenue loss from the United States and Europe."

Additional information on the workstation industry is available in the Gartner Dataquest Alert, "Worldwide and U.S. Fourth Quarter and Year 2000 Final Estimates for Workstations." This Alert provides workstation vendor market share results both worldwide and in the United States on a revenue and shipment basis. To purchase this Alert or subscribe to Gartner Dataquest's Workstations Quarterly Statistics Worldwide program, please call 800-419-DATA, or 408-468-8009.

Gartner Dataquest is the recognized leader in providing the high-technology and financial communities with market intelligence for the semiconductor, computer systems and peripherals, communications, document management, software, and services sectors of the global information technology industry.

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