Workstation Market Revitalized in 2005, States Jon Peddie Research Workstation Report

• AMD's platform share more than doubles, but Intel not suffering—at least not yet

• Dell and Nvidia dominate, but HP and ATI threaten

Robert Dow

TIBURON, CA—October 12, 2005—This year is shaping
up to be a solid year for the workstation and professional graphics
market, Jon Peddie Research reports in the latest installment of its
Workstation Report series, providing the most in-depth look at the fast-changing
landscape for professional computing markets and technologies. Workstation
vendors shipped 503.8 thousand branded workstations in the second quarter
of 2005, accounting for almost $1.3 billion in revenue. That bodes well
for the year, which promises to deliver growth in total revenue, bucking
the declines of recent years.

Dell continues to dominate the workstation market with a share of about
43%, and HP follows, recently narrowing Dell’s lead slightly.
Lenovo has jumped directly to the #3 position, thanks to picking up
ThinkPad-branded mobile workstations from IBM. IBM, Sun and Fujitsu-Siemens
round out the top six.

Average Selling Price (ASP) stabilizing

Not only is the revenue picture looking healthy for 2005, but perhaps
most heartening to vendors is that ASPs for x86-based machines are stabilizing
after a long downtrend, even modestly increasing in some spaces. “With
more favorable economic conditions, workstation customers are catching
up on their replacement cycles, spurred on by recent technology introductions,”
said author and JPR analyst Alex Herrera.”Features like dual-core
processors and 64-bit enhancements are showing up in the higher premium
platforms, supporting ASPs and boosting revenue.”

Big growth numbers for AMD, but not necessarily spoiling Intel’s

After signing on major OEMs in the past 18 months, AMD’s Opteron processor
penetration into workstations is growing strongly, roughly doubling
its share over the past three quarters.

But while that’s certainly welcome news for AMD, the company
still commands less than 2% of the overall market, with Intel’s
triumvirate of Pentium, Pentium M and Xeon shipping in roughly 93% of
all machines.

“Despite Opteron’s current advantages over Xeon, AMD’s gains
are not necessarily coming at Intel’s expense,” Herrera notes.
“We’ve seen Xeon’s share drop a bit, but overall Intel’s share
has stayed generally flat. And we’re seeing a good chunk of Opteron
sales going into spaces previously dominated by traditional proprietary
platforms like Sun’s UltraSPARC, HP’s PA-RISC, and IBM’s Power.”

Shifting ground in professional graphics

JPR also reported that over 633 thousand units of branded professional
graphics hardware shipped in the second quarter, yielding $240 million
in revenue. ATI and 3Dlabs continue to jostle for market share, but
it’s Nvidia’s Quadro brand that still dominates, commanding 69% of the
units and over 73% of revenue. While ATI has seen a surge in its lower-end
products thanks to major OEM wins, Nvidia’s results are most noteworthy
in the upper end of the market, where higher prices are yielding substantial
revenue, despite lower volumes.