Weaker than expected recovery in the U.S. and Japan has led IDC to lower its worldwide server market expectations for the second calendar quarter of this year, down 14.5 percent. While IDC continues to forecast a return to positive growth in the third and fourth quarters of 2002, the market recovery will not be enough to offset declines experienced during the first half of the year. IDC anticipates the worldwide server market will decline by –5 percent in 2002 over 2001.

While near-term market conditions are still challenging, the market research firm anticipates positive growth during the latter half of this year continuing into 2003. "After almost two years of battling tough economic conditions and capital spending freezes, the server market is well positioned to regain momentum in 2003 and beyond," said Vernon Turner, IDC's group vice president of Global Enterprise Server Solutions. IDC forecasts the server market will achieve a compound annual growth rate of 3.8 percent over the next five years, representing a $66.9 billion opportunity in 2006.

From a regional perspective, the U.S. market will continue to have the greatest share of the server market by the end of the forecast period. This is followed by Western Europe and Asia/Pacific excluding Japan. While the Japanese market is expected to remain, the rest of Asia/Pacific will illustrate significant growth with a projected 9 percent CAGR over the next five years driven by an anticipated wave of telecom server investments beginning to unfold after 2003. Another key area of growth is within the Blade server market, which is expected to reach $3.7 billion by 2006. Server blades are anticipated to represent 20 percent of server unit shipments by the end of the five-year forecast period.

"The Blade market is a new area of opportunity for server vendors," said Mark Melenovsky, IDC's research manager for Server and Infrastructure Hardware Research. "This new market will bring dramatic changes to the server landscape while creating new areas of demand for server management and clustering."

Contrary to the Blade market, IDC believes proprietary mainframe systems will lose share throughout the forecast period, declining from approximately 13 percent in 2001 to 8 percent in 2006. "Much of the decline in share for mainframe systems is attributed to the transition of some workloads moving to UNIX- and Windows-based systems in Japan. There is still considerable investment in IBM zSeries machines, which will remain an important element of many end users' computing infrastructures going forward," said Steve Josselyn, research director, Enterprise Server Fundamentals program.

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