Market Scope. Magic Quadrant Methodology

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1 Markets, J. Enck, A. Powell Research Note 12 May 2003 Global IA High-Volume Server Magic Quadrant, 1H03 Gartner's Magic Quadrant for Intel Architecture in 1H03 indicates that Dell Computer, Hewlett-Packard and IBM continue to dominate the vendors in the "industry-standard server" market. Core Topic Hardware Platforms: Server Platforms Key Issue How will centralized and distributed servers evolve during the next five years? Market Scope The Global Intel Architecture (IA) High-Volume Server Magic Quadrant focuses on the enterprise view of mainstream, industry-standard servers that are configured with one to eight 32-bit IA processors or one to four 64-bit Itanium family processors suitable for a wide variety of utility and application tasks running on any IA-compatible operating system (for example, Windows 2000, Windows 2003, NetWare or Linux). Coverage of specialized servers can be found in complementary Magic Quadrants, such as the Midrange Server Magic Quadrant. This Magic Quadrant specifically excludes blade servers, which we view as too immature to be considered "mainstream." Magic Quadrant Methodology Gartner's Magic Quadrants map each vendor's or product's "ability to execute" against a coherent business and technology vision. A number of factors influence the positioning, including: 1) product strategies; 2) packaging and branding initiatives; 3) manufacturing and distribution efficiencies; 4) sales and marketing effectiveness; 5) professional service availability (internal or external); 6) architectural viability and flexibility; 7) bundled deployment and management technology; 8) third-party certifications and partnerships; 9) investment resources and corporate commitment; and 10) global market share. The higher the risks and uncertainties in these categories, the more depressed a vendor's position and its resulting leverage will be in the market. Successful vendors will demonstrate consistency and steady progress, while unsuccessful vendors will demonstrate a lack of innovation, confusing market strategies, inefficient organizational models or other changes that lower the chances of market success. Gartner Reproduction of this publication in any form without prior written permission is forbidden. The information contained herein has been obtained from sources believed to be reliable. Gartner disclaims all warranties as to the accuracy, completeness or adequacy of such information. Gartner shall have no liability for errors, omissions or inadequacies in the information contained herein or for interpretations thereof. The reader assumes sole responsibility for the selection of these materials to achieve its intended results. The opinions expressed herein are subject to change without notice.

2 Market Status All IA server vendors faced difficulties in 2002, and the problems continued into 1Q03. The economic downturn kept a tight hold on IT spending budgets, and no new operating system or application release came to market to spur new hardware deployment. To find new areas of growth, IA server vendors turned to emerging technologies, such as blade servers and high-performance computing clusters, to stimulate sales with mixed results. However, the economic downturn did not slow the advance of IA- 32 processor technology. Intel continued to revise its product line, releasing the Pentium 4 as a replacement for the Pentium III, and releasing dual-processor Xeon and Xeon multiprocessor products as replacements for dual-processor Pentium III and larger Pentium III Xeon servers. In short, processor speeds and cache sizes increased, as did the associated electrical power draw and heat generation of these new systems (see Figure 1). Figure 1 Global IA High-Volume Server Magic Quadrant, 1H03 Challengers Leaders Dell Computer HP IBM Ability to Execute FSC/Fujitsu NEC/Bull Unisys Stratus Legend AMD (et al.) Sun Microsystems Acer, Gateway and Toshiba As of April 2003 Niche Players Visionaries Completeness of Vision AMD = Advanced Micro Devices and its partners FSC/Fujitsu = Fujitsu Siemens Computers/Fujitsu HP = Hewlett-Packard Stratus = Stratus Technologies International Source: Gartner Research (April 2003) Leaders Quadrant 12 May

3 The three vendors in the Leaders quadrant continue to dominate the global market and account for more than 60 percent of the total server shipments (all server types). These vendors achieved the following accomplishments since the last publication of this Magic Quadrant: Dell Computer forged a partnership with EMC that strengthened Dell's credibility as an enterprise-class server vendor, and Dell entered a relationship with Oracle to drive cluster technology further into the enterprise. Dell also has expanded its professional-services offerings around servers to provide more "solution-oriented" services. Hewlett-Packard (HP) articulated its IA server product road map, putting forth the ProLiant server as the mainstream offering of the merged HP-Compaq company. HP also improved the efficiencies of its manufacturing and distribution operations, and added new, factory-level customization and integration capabilities that span all HP server and storage products. IBM released its long-awaited x440 server, which provides a new approach to building scalable servers. In addition, IBM streamlined its global supply chain and its manufacturing operations for all IBM products, enabling the company to achieve new levels of cost control and greater efficiencies in its manufacturing operations. As a result of these developments, we have increased the ability to execute for all three vendors. The vision rating, however, remains unchanged from the 1H02 Magic Quadrant. From a pricing perspective, Dell, HP and IBM have been extremely competitive in bid situations, which means that enterprises should expect pricing parity from all three vendors in most bidding situations. In terms of sales aggression, IBM has moved to the front of the pack, bypassing Dell. IBM has also put sales tools in place to protect the bottom-line profitability of each bid; therefore, in most cases, IBM is not sacrificing margin for market share. Challengers Quadrant Once again, Fujitsu Siemens Computers/Fujitsu (FSC/Fujitsu) is the sole vendor in the Challengers quadrant. FSC/Fujitsu has improved its ability to execute as a result of leveraging technology licenses from other companies, as well as its overall execution in its geographies. FSC remains a strong player in Europe, and Fujitsu is a competitive server vendor in Japan. However, FSC/Fujitsu continues to be a less-strategic player in the overall global market. 12 May

4 Niche Players Quadrant Sun Microsystems is a new entrant to the Global IA High-Volume Server Magic Quadrant, because of the introduction of IA-based uniprocessor and dual-processor systems. Sun's IA products have gained traction in its customer base. However, the lack of breadth of Sun's product line, insufficient support for the Windows operating system, a shortage of support for mainstream Linux distributions, the lack of traction outside its customer base, and Sun's newcomer status in the global IA market lead us to position Sun in the Niche quadrant. Other vendors in the Niche Players quadrant Acer, Gateway and Toshiba have struggled to remain viable in the global enterprise IA server market. Gateway is relaunching a new enterprise server strategy in 2003, while Acer and Toshiba are effective only in limited geographies. Because of the limited server product line offered by these vendors and their lack of traction in the global market, we have downgraded their positions on both the Ability to Execute and Completeness of Vision axes. The final vendor in this quadrant, Legend, is very strong in one geographical area: China. Although all of the global vendors have aggressively been attacking the Chinese market, Legend has the advantage of being an incumbent vendor it was started in 1984 by the Chinese Academy of Scientists. Although Legend has offices outside of China, it is not an effective global competitor. Visionaries Quadrant Stratus Technologies International and NEC/Bull remain in our Visionaries quadrant, with improved ability to execute and vision positioning. These advances are the result of launching a lowercost, more-space-optimized version of their fault-tolerant server offerings (Stratus and NEC co-develop this technology) and an improvement in sales focus. Stratus has gained sales by focusing on specific market segments, rather than attempting to sell to the larger general-purpose sever market. NEC has sharpened its sales focus by targeting the North America market with its fault-tolerant server line. Unisys enters this Magic Quadrant in the Visionaries quadrant, thanks to the release of the ES The ES provides support for four-way configurations, with growth up to 32-way configurations. Like the IBM x440, the ES can be used in a conventional rack as a stand-alone server, and then expanded by adding additional processors to reach an eight-way configuration, and more server units to achieve 32-way capability. Unisys did not appear in the previous version of this 12 May

5 Magic Quadrant because the quadrant does not track servers above eight-way configurations. Advanced Micro Devices (AMD) and its channel partners have moved from the Niche Players quadrant to the Visionaries quadrant on the strength of the AMD Opteron (originally codenamed "Hammer") product. Opteron is offered as a 64-bit uniprocessor or symmetric multiprocessing server that is capable of running: 1) a 32-bit operating system hosting 32-bit software; 2) a 64-bit operating system hosting 32-bit software; and 3) a 64- bit operating system hosting either 32-bit or 64-bit software. We regard this design as visionary, although AMD's ability to execute in the global market has yet to be proved. Acronym Key AMD Advanced Micro Devices HP Hewlett-Packard IA Intel Architecture Bottom Line: Enterprises should use the Global Intel Architecture (IA) High-Volume Server Magic Quadrant, together with other Gartner research tools, such as the Server Evaluation Model, to choose an appropriate IA server vendor. Furthermore, enterprises should not use this Magic Quadrant as the only criterion for pre-qualifying vendors for a request for proposal or a request for quotation. As the global market continues to be dominated by five vendors Dell Computer, IBM, Hewlett- Packard, FSC/Fujitsu and NEC/Bull enterprises should evaluate the use of other vendors based on geographical strengths, relationships with key software vendors, alignments within specific vertical industries and availability of innovative technology (for example, fault-tolerant hardware). Enterprises looking for application and database servers should also evaluate the broader midrange server market, as presented in the Midrange Server Magic Quadrant, and not focus solely on IA servers. 12 May