Server Channel Expected to Grow, but With a Changed Business Model

A report published last week by IDC indicates that the popular assumption that the server market is nearing the end of the road is far from correct.

IDC's "Server Channel Forecast and Analysis, 1999-2004" report describes a vibrant market that in some cases is stronger than ever.

A report published last week by IDC indicates that the popular assumption that the server market is nearing the end of the road is far from correct.

According to IDC, indirect channel revenue will increase at a compound annual growth rate almost twice that of the direct channel. In terms of price ranges, the report reveals that a huge opportunity exists for the channels in the lower price ranges. In 1999, entry server sales accounted for 53 percent of all server revenue. By 2004, this percentage will inflate to 58 percent.

Thus, it is critical that vendors "choose the right type of channel while constantly assessing their partners and keeping a watchful eye on the market to ensure they are aligned with the right companies," Janet Waxman, program director of IDC's Systems and Storage Distribution Channels group said.

One key aspect of this changing model, IDC notes, is a greater shift toward the use of the Internet as a channel. With so many customers struggling to become "e-enabled," the services opportunity and integration required are quite extensive. Many enterprises will thus look to indirect channels for these solutions.

Waxman notes, "many industry watchers believed the Internet would be the final assault on the indirect channels. But the opposite is true. The Web has spawned many new businesses, some of which require the face-to-face selling that a channel partner can provide."

Despite the hype about the Internet, other new technologies will present the server market with even greater challenges. Storage, the report notes, shows tremendous growth for the channel, and enterprises seeking a one-stop integration and support feature will be drawn to it.

The report is divided into four sections. The first section provides an overview of the total server market. The second section gives a detailed analysis and forecast of the major channel partners as well as a discussion of their current and evolving role in server distribution. The third section examines the key challenges facing server vendors. The fourth section consists of tables detailing server market revenues and shipments by price range, operating system, and channel for the United States and worldwide.

A copy of "Server Channel Forecast and Analysis, 1999-2004" (IDC #B22661) can be purchased through AllNetResources for $5,000. More information about the content can be found here as well.

Related Stories:
IDC Report Paints Conflicted Picture of Server Market, Circa 2004
Application Server Market to Reach $9 Billion by 2003

This article was originally published on Oct 10, 2000
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