The market for PC servers in 1998 was markedly slower than the market in 1996 and 1997, according to a report by market researcher International Data Corporation (IDC). At an 8 per cent rate, the growth of the PC server market -- defined by Intel-based servers priced at less than $US25,000 -- was stronger than that of other server markets but down year-over-year. In 1996, the PC server growth rate was 50 per cent; it was 42 per cent in 1997.
IDC attributes vendor consolidation and transition as one of the factors for the growth slowdown in 1998. In 1998, Digital Equipment was acquired by Compaq and "the move strengthens the top four market share vendors' hold within Fortune 1000 accounts," the report stated.
Also, the IDC report stated that four-way servers continue to lose share for two primary reasons. The first is that prior to the arrival of the Xeon chip, four-way systems ran only Pentium Pro and two-way servers ran the faster Pentium II. Therefore, it was harder for customers to justify the cost differential between four-way and two-way servers.
Second, "Intel was able to supply only a limited number of four-way Xeon chips to the market. IDC believes 1999 will see a revival of four-way machines," the report stated.