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Workstation market seeing some return of momentum in Q3’11

Posted by Alex Herrera on December 8th 2011 | Discuss
Tags: workstation report

Last quarter, we labeled the workstation market's behavior with a simple one-word description: normal. Shipment results weren't great, but they weren't bad either. Now in less volatile times, no vendor would get enthused by such tepid numbers. But these haven't been those times.

Not that anyone in our industry needs the refresher, but remember that we hadn't really seen anything approaching typical behavior in several years. From mid-2008 to mid-2011, we lived through the biggest economic downturn in a generation, followed by a relatively steady, but not stutter-free, recovery. Meanwhile, the closely related market for professional graphics, its results a harbinger for workstations, found its recovery pace a bit too brisk, stumbling into a mild — and fortunately short-term — second dip.  In that context, the neither hot nor cold results from the workstation market's second quarter might not elicit any celebration, but we imagine they at least calmed some still-frayed nerves.

Q2's market stability begged the question: would there be a resumption of growth in the third quarter, more stability, or worse, a return to weakness. Well, the numbers are in, and they look good. Around 1.02 million workstations shipped worldwide in the third quarter, representing robust 12.5% sequential growth as well as 20.1% year-over-year. The quarter saw a new high-water mark for the market, marking the first time shipments have exceeded 1 million units.

Q3 did represent a meaningful push forward, but the question remains as to whether it will last. Global economic uncertainty remains in abundant supply. The financial picture in Europe continues to change on a daily basis — one minute, it's a doomsday scenario and the next a light appears at the end of the tunnel. Until the volatility in financial markets subsides, we have no strong confidence that the workstation market (really any market, for that matter) will find a steady pace forward. That said, we do expect growth to resume, albeit modestly.

Among vendors, HP reinforced its top position in workstations, despite the company's awkward about-face in its plans for the Personal Systems Group (PSG), the business unit that houses the company's workstation business. Dell remained at number two, though lagging further, while Lenovo gained ground at number three, in part thanks to its nascent joint venture with NEC. And in the closely related market for professional graphics hardware, Nvidia continued its dominance of the market, with its Quadro brand stubbornly refusing to cede much share to a more competitive FirePro line from AMD.