Dataquest: Workstation market continues to slip

The worldwide workstation market, smarting from a soft economy and dried up demand, continued to stumble during the second quarter of the year, with shipments sinking almost 15 per cent from the same period last year, according to preliminary results from a study by Dataquest Inc., a unit of Gartner Inc.

Not even Intel Corp.’s new 64-bit Itanium chip could boost the market, which posted its third consecutive quarter of declines, Dataquest reported. The total number of units shipped in the second quarter this year was 344,580, down 14.6 per cent from the same period in 2000.

According to Dataquest analysts, even though Itanium was introduced to workstations in the second quarter, high-end workstation users tend to be conservative and are waiting for the next generation of the speedy chip before they make a buy.

But the market’s disappointing results could not all be pegged on Itanium’s slow start and the slumping economy.

The “reality check” is that “endless demand for branded workstations just doesn’t exist in the market,” Gartner Dataquest workstation analyst Pia Rieppo said in a statement.

In fact, Dell Computer Corp. and IBM Corp. were the only vendors that experienced growth during the quarter. Dell’s shipments increased by 14.1 per cent in the second quarter over the same period last year, to over 108,000 units shipped.

Still, according to Dataquest, Dell’s results are not spectacular given that the company halved its growth rate from the past few years.

IBM showed a slight growth increase of 0.4 per cent, shipping 44,500 units for the second quarter of this year. IBM saw some growth due to the fact that it revamped its low-end systems pricing, the researcher said.

Hewlett-Packard Co. (HP), meanwhile, posted the biggest decline, shipping 42.3 per cent fewer units during the quarter over last year. According to Dataquest, HP took the hit when it reorganized its workstations into a single product line and implemented changes to its channel strategy.

Other vendors who suffered second-quarter doldrums included Compaq Computer Corp., reporting a 27.3 per cent drop-off in workstation shipments, and Sun Microsystems Inc., which shipped 17.2 fewer units in the period.

Another problem due to plague all vendors, according to the researcher, is that consumers fail to see the advantage of low-end workstation over PCs.

“Many workstation end users run low-end applications that may not benefit from workstation class service and support,” Rieppo stated.

Given the obstacles, the analyst predicted that overall 2001 would be a tough year for the workstation market.

The results presented in this study were preliminary. The final statistics will be available in Gartner Dataquest’s Workstations Quarterly Statistics Worldwide program, due out soon.

Dataquest, a unit of Gartner Group Inc., in San Jose, Calif., can be reached at