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The server market remained flat during the first quarter this year, as the slowdown in IT spending continued to bite.

However the US market is stabilising, giving rise to hopes of a recovery in spending later this year, according to Gartner Dataquest. The analyst firms reports a preliminary figure for server shipments of 1.09 million in the Q1 2002, a modest increase of 0.6 per cent over Q1 2001.

Compaq remained in the top spot with 22.8 per cent of the worldwide server shipments (by volume), followed by Dell and IBM, with 17.8 per cent and 14.3 per cent, respectively. Dell was the only vendor to record positive double-digit year-over-year growth.

"Businesses are not ready to spend on tech products unless it's absolutely crucial," said Shahin Naftchi, a senior analyst at Gartner Dataquest. "Customers mostly purchase the least expensive systems to meet their short-term needs and can show a quick return on their IT investment."

Sales in the US were the one bright spot in an otherwise subdued market. Sales of servers in the US were up 7.6 per cent in the quarter, with shipments of 419,622 units in Q1 2002, up from 390,027 units in Q1 2001. Dell, helped by competitive pricing through its build to order model, increased its lead in the US market with 26 per cent of unit shipments, followed by Compaq with 21.4 per cent, according to Gartner Dataquest.

Gartner Dataquest said it appears the US market is "starting to stabilize" but said it was too early to talk of a recovery, which will only become apparent over the next six months.

Because of the length of server purchasing cycles, the performance of the next two quarters will be crucial in giving a better indication of server market recovery. ®

Worldwide Server Unit Shipment Estimates for 1Q02 (units)
Company 1Q02 Shipments 1Q02 Market Share (%) 1Q01 Shipments 1Q01 Market Share (%) Growth (%)
Compaq 248,201 22.8 244,273 22.6 1.6
Dell 193,407 17.8 169,406 15.7 14.2
IBM 155,107 14.3 157,232 14.5 -1.4
Hewlett-Packard 93,641 8.6 108,038 10.0 -13.3
Sun Microsystems 68,655 6.3 69,484 6.4 -1.2
Others 329,418 30.2 333,121 30.8 -1.1
Total Market 1,088,429 100.0 1,081,554 100.0 0.6

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