Workstation Market Rebounds for Dell and Intel

Jon Peddie Research reports today that Dell and Intel have reversed their tailspin of a year ago in the workstation market. “Despite their dominance, workstation industry leaders Dell and Intel were in a tailspin 12 months ago, both steadily losing ground to their respective rivals HP and AMD,” notes Alex Herrera, senior analyst and Workstation Report author for Jon Peddie Research (JPR).

The analysis firm has completed market tabulations and analysis for Q3'06, and results point to a reversal in fortunes for both. Overall, the workstation market showed continued strength, with vendors shipping roughly 623,000 workstations, accounting for about $1.5 billion in revenue. Year-to-year, quarterly volume was up 17% and revenue up 10.5%.

Results for the closely coupled professional graphics market were similarly stronger, with units up 37.3% to 869.1 thousand and revenue up 15.4% to $284.1 million. JPR says Dell held on to its top position as workstation vendor, with a 41% market share (units). And Intel stayed dominant as the primary platform supplier, represented in roughly 92% of machines shipped.

Just a year ago, performance for Intel's Xeon platform was looking ragged compared to AMD, and the market leader was consistently flogged in the press. Dell was in a similar position, having tied itself exclusively to Intel for workstation products. But the long-awaited revamp of the Xeon platform in the spring began a turnaround for both. "With the release of a much more competitive dual-socket platform in the second quarter, Xeon's share immediately began to improve," said Herrera. "And when Xeon regained market strength, so did Dell."

ATI's share of workstation graphics hardware declined in Q3 to 19.1%, down from 24.4% in the previous quarter, while Nvidia (77.8%) retained dominance in the market. The drop begged the question as to if—and how much—AMD's Q3 acquisition of ATI adversely affected the latter's market position. Herrera says that while JPR sees a risk that AMD ownership will negatively impact ATI's share in the Intel-dominated workstation space, using Q3 results as evidence is likely premature. "A quarter's results are usually indicative of factors like OEM decisions and orders made the quarter preceding," Herrera said, "and acquisition plans weren't made public until Q3 was already underway. Results from Q4'06 and beyond will be better indicators of the AMD effect on sales of ATI professional graphics, so stay tuned."