The PC server market experienced a slight increase in sales during 1998, with Compaq heading the list of top hardware manufacturers.
According to figures by market research company IDC, server sales grew eight per cent year on year in 1998. Growth rates in 1997 and 1996 were 42 per cent and 50 per cent respectively.
The IDC report, PC Server Year in Review, showed that Compaq's market leadership diminished last year, although it still held on to its pole position.
Amir Amahrai, senior analyst at IDC's commercial systems and servers group, said: 'The revenue slowdown has been caused mostly by a drop in average sales value and a slowdown in high-end servers.'
Although the market under-performed in 1998, Amahrai said the long-term outlook was favourable, due to Intel's Xeon processor. Other influences included increased sales of white-box PC servers to small businesses and Internet service providers, consolidation among second-tier vendors and the recovery in the Japanese market.
Amahrai added that he expected to see worldwide PC server revenue rebound aggressively to double-digit growth this year.
As the number one server vendor, Compaq generated worldwide revenue of $3.8 billion. It lost four market share points compared with 1997 - leaving it with 29 per cent - due to inventory overload in the first quarter and what it described as the 'distractions' of the Digital acquisition.
Hewlett Packard retained second place, showing a 26 per cent sales growth compared with 1997 to reach $1.7 billion with 13 per cent market share.
But the fastest growing PC server company was Dell, which saw revenue growth of 76 per cent to $1.6 billion.
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