HPC Server Market Shows Robust Growth in Second Quarter, According to IDC

FRAMINGHAM, MA – September 10, 2008 – Factory revenue and unit shipments for the High Performance Computing (HPC) technical server market exhibited 10% growth in the second quarter (2Q08), according to IDC's Worldwide High-Performance Technical Server QView. Revenues grew 10% over the first quarter* and 4% compared to the same period last year to reach $2.5 billion in the second quarter. Shipments of server system units in the 2Q08 HPC market totaled 45,000, down 5% from the first quarter.

The second quarter saw solid growth in the mid and high end of the market and softness in lower priced x86 servers, as evidenced by average selling prices (ASPs) that were up 16% compared to 1Q08. According to Jie Wu, research manager for technical computing, the 2Q08 HPC server revenue leaders were HP with 37% market share, IBM with 27%, and Dell with 16%.

"Powered by their price/performance advantage, clusters now dominate all segments of HPC market. In addition, the HPC market is seeing a shift towards fatter nodes as multicore technology becomes pervasive. This is also driving requirements for larger and faster memories, along with improved interconnection technologies," said Earl Joseph, IDC program vice president for HPC.

The HPC portion of the overall server market follows a different pattern due to the nature of spending on R&D projects. Because government and university buyers have longer-term budget cycles that are not immediately impacted by economic slow downs, economic shifts typically take more than a year to work their way into these budgets. In addition, many industrial buyers are still investing in R&D to improve their competitiveness in the tighter economy. IDC is closely watching the market to see when the broader economic softness begins to impact HPC spending.

Newly enhanced to better capture HPC market dynamics, the IDC Worldwide High-Performance Technical Server Qview presents the HPC market from various perspectives, including by competitive segment, vendor, cluster versus noncluster, geography, and operating system. It also contains detailed revenue and shipment information by HPC model.

The enhanced methodology enables the HPC Qview to produce:

* More consistent and concise tracking of HPC server revenues, by more clearly separating out non-server revenue items like storage, software, and services

* More robust quarterly validation, by using both HPC data and IDC's broader enterprise server analysis and data sources, and

* New peak performance and price/performance metrics.

"After more than a year of cross-analysis involving IDC's technical computing and enterprise server teams, we found ways to make OEM reporting of HPC server revenue even more consistent and robust," said Vernon Turner, senior vice president of IDC's Enterprise Infrastructure, Consumer, and Telecom research. "Our enhanced methodology will result in better accounting for HPC server revenues by more accurately separating out the other HPC revenue categories."

"These changes reduce the 2007 overall HPC server market revenues on a pro forma adjusted basis to just over $10 billion. IDC projects that the HPC server market will grow at a compounded annual rate (CAGR) of 9.2% to reach $15.6 billion in 2012. This rate is in line with IDC projections before the recent methodology enhancements," added Joseph. "The continued strong growth of the HPC market is being driven primarily by clusters and newer processor technologies."

For more information about the IDC Worldwide High-Performance Technical Server Qview, please contact Steve Conway at 651-592-7441 and sconway@idc.com.

* Note: The quarterly comparisons are based on newly adjusted figures for the earlier periods (1Q08 and 2Q07). The adjustments reflect the enhancements IDC made to its industry-leading HPC tracking methodology in the second quarter (2Q08).

About IDC

IDC is the premier global provider of market intelligence, advisory services, and events for the information technology, telecommunications, and consumer technology markets. IDC helps IT professionals, business executives, and the investment community make fact-based decisions on technology purchases and business strategy. More than 1,000 IDC analysts provide global, regional, and local expertise on technology and industry opportunities and trends in over 110 countries worldwide. For more than 44 years, IDC has provided strategic insights to help our clients achieve their key business objectives. IDC is a subsidiary of IDG, the world's leading technology media, research, and events company. You can learn more about IDC by visiting www.idc.com.

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