The First Quarter of 2010 Another Solid Stepping Stone in the Workstation Market’s Road to Recovery

Posted: 06.07.10

TIBURON, Calif- June 7, 2010 - The workstation market posted another round of steadily improving results for the first quarter of 2010, taking one more solid step in its recovery from the lows of 2009. So reports Jon Peddie Research (JPR) after wrapping up its first quarter analysis as part of its JPR Workstation Report series. The technology and market research firm reports that the industry shipped 725 thousand workstations worldwide in Q1, resulting in sequential growth of 1.1% and a year-over-year increase of 25.7%.

While a welcome number, the 25.7% gain over the same quarter a year ago should be taken with a grain of salt, as it's more a reflection on how bad the Q1'09 market performed than how good Q1'10 turned out. Instead, it was the sequential gain that this time proved a better indicator of the progress the market is making in its climb back up to pre-recession levels.

In periods of flat or even modest growth, Q1 sales tend to lag Q4's, so even a modest sequential uptick is a bullish sign. And from that perspective, Q1'10 was stronger than might first appear, as a 1.1% sequential increase for Q1 signals a market ahead of its normal pace, more evidence of sustained momentum for its recovery from the ugly days of 2009.

Dell comes out swinging (again) in Q1'10 ... back in a virtual dead heat with HP
It's beginning to look like HP's coronation as the new king of workstations might have been premature. After years of closing a major gap to market leader Dell, HP flirted with volume leadership for three consecutive quarters, essentially deadlocked with Dell for Q4'08 through Q2'09. Finally, in the third quarter of 2009, HP surged ahead to take the workstation shipment crown outright for the first time.

But HP didn't get much time to revel in the top spot, as the very next quarter Dell's shipments surged, in the process virtually eliminating the scant lead HP had been able to manage. And in Q1'10, the company surprised to the upside once more, jumping back in front of HP, 39.3% to 38.1%. Since HP looks to still have a slight edge in revenue, JPR's calling it a tie, but Dell's successfully served notice that workstation market leadership is back up for grabs.

Amazingly, the professional graphics hardware market sets a new record for shipments, surpassing 2007 and early 2008 numbers
The professional graphics hardware market shipped 1.26 billion total units, up 17.6% sequentially and a whopping 77.9% year-over-year. Not only was growth surprisingly hot, but the market managed to set a new record for units shipped, besting totals from the bullish days of late 2007 and early 2008. Given the exceptionally precipitous downturn of 2009, a new record wasn't expected quite so soon, but the major beneficiaries Nvidia and AMD (ATI) certainly aren't complaining.