The Workstation Market Regaining its Health, but the Road to a Full Recovery Won’t be Short

Posted: 12.04.09

The Workstation Market Regaining its Health, but the Road to a Full Recovery Won’t be Short: Jon Peddie Research

TIBURON, Calif— December 3, 2009. So far, the second half of 2009 for the workstation market is proceeding according to the script Jon Peddie Research (JPR) had written several quarters ago. A recovery is surely taking hold, but rather than the fast and furious type, it’s shaping up more as the slow and steady variety.

Q3’09 wasn’t a gangbuster quarter for the industry, but then it wasn’t expected to be. What JPR did predict was that the quarter would affirm two things: one, that the market did indeed bottom during the first half of 2009, and two, that the second quarter’s modest uptick wasn’t an aberration. And on those counts, the third quarter of 2009 came through, delivering modestly better results than did Q2. All told, the industry shipped 644.6 thousand workstations, resulting in a 7.1% sequential increase over the second quarter (and a more moderate 24.5% year-over-year decline).

(Source: Jon Peddie Research)
Workstation shipments Q2CY08 Q3CY08 Q4CY08 Q1CY09 Q2CY09 Q3CY09
Total (K units) 867.4 854.2 764.3 576.7 602.1 644.6

Table 1 Total workstation market (worldwide, in K units)

The third quarter’s growth was of course welcome, but certainly doesn’t signal an imminent return to the robust market levels of 2007 and 2008. Rather than making a dramatic stride forward, it instead marked one small step on what’s more likely a prolonged road to recovery. The way it’s panning out, the climb back up will take a lot longer than did the fall down.

HP stakes its claim as the top workstation provider/p>

It was just a matter of time. One look at the market share trend lines, and it wasn’t a stretch to envision HP some day overtaking Dell as the volume leader in workstation market. In just a few short years, HP had climbed from a distant second in the market into a virtual dead heat with the long-time leader. But in the third quarter, HP jumped to a 40.3% market share, in the process pulling away from Dell (at 37.5%) to mark the first time (in the firm’s records) HP has held clear control as the volume leader.

It’s been a dramatic reversal of fortunes. Looking back five years, Dell looked poised to dominate the workstation market by a wide margin. But then triggered (in part) by its long-standing strategy to stick exclusively with Intel rather than exploit upstart AMD’s surging workstation/server platform, Dell saw its workstation share steadily drop to a low of 37.7%.

When Intel finally bounced back, so did Dell, though without quite the same gusto. Because even though Dell had regained its footing, HP had been pressing its foot firmly on the gas and coming up fast in Dell’s rear-view mirror. And finally in the third quarter, HP surged past to claim the position of sole market leader, in the process pushing Dell’s share back down to its historical low.