IBM still leads Canadian server market

Though the tech sector is going through a rough time, servers continue to represent an active market, according to one analyst.

Active, but not likely to see much growth in 2001, added Alan Freedman, research manager of servers and storage at IDC Canada.

” In Q1 (the first quarter), comparing it year over year, there was still quite a bit of growth because Q1, 2000, was a slow quarter because of the year 2000 (bug),” said Freedman.

“People hadn’t opened up their budgets for capital spending until at least late first quarter, if not second quarter. So we had US$365 million in Q1 and $310 million in Q1 last year.”

Freedman’s numbers show that, in 2000, the server market was worth $2 billion market.

“It experienced quite a bit of growth in 2000, and it will be quite a bit lower in 2001, not surprisingly,” he added. “As the economy goes down, people are putting off server purchases, especially at the higher end of the server market.”

According to last year’s revenue numbers, IBM sits in the number one spot, with about a 33 per cent share. Following ten points behind is Hewlett-Packard and Compaq Computer Corp. is third at 17 per cent.

It’s some of the differences between the two markets that are helping to keep Canadian vendors afloat.

“One thing about Canada is the five major players, IBM, HP, Compaq, Sun and Dell have a bigger percentage of the marketplace than they do in the U.S. or worldwide,” he said. “We don’t have a lot of the Japanese vendors doing significant business here in Canada and the number of smaller competitors (here) is smaller than in the U.S. The major vendors, then, take up a larger piece of the pie.”

Chris Pratt, national sales and marketing manager at IBM Canada in Markham, Ont., said that sheer size helped them weather turns in the market.

“I don’t want to presumptuous and talk about how we lead the pack and everything,” he said. “We have a broad product line so that we can be all things to a lot of people, so we are not impacted by downturns in part of the economy.”

Pratt said that any specialist would say their specific sector of the industry is a financial barometer for the market, but customers are the real indicators.

“Customers are being more discerning about how and when they spend their money, so decisions are taking longer to be made,” he said. “We are thinking harder before we buy something, and that is true of the market right now.”

Freedman said he doesn’t see any of the “big five”, including IBM, receiving any fatal blows because of the server market.

“I think that they are all working at revamping their product lines, coming out with new features,” he said. “HP is coming out with their Superdome – they are really pushing that. It’s not all about hardware anymore. It’s hardware, but it is wrapped around with value-added services and software. That’s the main push of vendors these days – they are talking about solution sales, not hardware sales and not server sales. But wrapping it with services, both professional and installation and support, as well as software programs that ease the installation of the servers as well as facilitate better management.”

IDC Canada in Toronto is at IBM Canada in Toronto is at Hewlett-Packard Canada Ltd. in Toronto is at

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