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Workstation Market Tanks in Q1’09 - But it’s Not All Bad News

Posted: 06.08.09

TIBURON, Calif— June 8, 2009--No surprise, the other shoe dropped in Q1’09. Exiting Q4’08, there was little reason to expect improvement entering the first quarter of ‘09, while unfortunately there were good reasons to suspect it might turn out even worse. For one, while the market in Q4’08 included two poor quarters — with October escaping much of the initial carnage caused by the global economic downturn — Q1’09 had a full three months worth of deep recession to contend with.

The result? Well, Jon Peddie Research (JPR) analyst Alex Herrera has completed analysis of the quarter and reports that the market indeed took substantial hits in both unit volume and revenue. All in all, Q1’09 saw about 576.7 thousand machines shipped, representing a sequential decline of 24.5% and 26.9% year over year (YoY).

Workstation market results Q4CY07 Q1CY08 Q2CY08 Q3CY08 Q4CY08 Q1CY09
Units (K) 847.9 822.6 867.4 854.2 764.3 576.7
Total ($M) $2,024.0 $1,891.0 $1,864.3 $1,831.7 $1,579.8 $1,107.7

It also wasn’t a shock to see workstation ASPs suffer in the quarter, dropping 7.1% sequentially and 16.5% YoY. Experiencing a double whammy of sorts, ASPs were hampered not only by poor global economic conditions, but by the timing of Intel’s workstation platform cycle as well. The leading provider of processors into the workstation market launched a major platform release (Tylersburg, with Nehalem Xeon processor) just as Q2 began, leaving Q1 with older products which most often see price reductions as the market anticipates arrival of new models.

So where’s the good news?

But market results — in combination with improving macroeconomic global indicators — offer up some hopeful possibilities moving forward. Herrera reports that while workstations in Q1’09 took that big turn down, the closely related market for professional graphics hardware was essentially flat from Q4’08. And that performance — no better, no worse — along with more optimistic reports on broader economy’s health, offer up hope that the workstation market should see bottoming in subsequent quarters.

Dell finds some solace in improved share

The significant decline in ASPs illustrates the extent buyers were penny-pinching in Q1’09, behavior that appeared to favor Dell in its on-going battle with HP for workstation market supremacy. The low-cost Entry segment grew in unit share, while the more performance-focused mid-range dropped. In conjunction, Dell’s share of the fatter Entry segment swelled, allowing Dell to raise its overall share of the global workstation market to 42.1%, while HP’s declined modestly to 36.5%.