Contents. Hardware Platforms Weekly Issue 17

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1 Hardware Platforms Weekly Issue 17 Introduction to Hardware Platforms Weekly Hardware Platforms Weekly allows Gartner Dataquest analysts to share opinions and analysis of key events as they unfold. To learn more about Gartner's industry-leading products and services, we encourage you to contact us at: or contact your local account executive. You can also visit us at About Gartner Gartner Dataquest is the recognized leader in providing the high-technology and business communities with market intelligence for the semiconductor, computer systems and peripherals, communications, document management, software, e-business, and professional services sectors of the global IT industry. Gartner provides unrivaled thought leadership for more than 10,500 organizations, helping clients achieve their business objectives through the intelligent and efficient use of technology. Additionally, Gartner helps technology companies identify and maximize technology market opportunities. Gartner's technology content and strong brand reach IT professionals globally through Gartner Research, its research and advisory unit; Gartner Services, its custom consulting unit; Gartner Events, including Gartner's renowned Symposia; and at Contents Hardware and Systems Focus Area... 2 Spotlight on Hardware and Systems... 2 Recent Spotlight Articles... 2 Market Highlights... 2 Workstation on the Rise Again: Shipments up for Second Straight Quarter... 2 Vendor Highlights... 3 Palm: Ready to Do Business in China... 3 Client Computing... 4 Palm Launches Zire 71 and Tungsten C... 4 Enterprise Computing... 5 AMD Launches Opteron Processor... 5 Recently Published Research... 6 Press.gartner.com... 7 Upcoming Gartner Conferences... 7 Gartner, founded in 1979 and headquartered in Stamford, Connecticut, achieved fiscal 2001 revenue of $963 million. Gartner's 4,000 associates, including 1,200 research analysts and consultants, are in more than 90 locations worldwide Gartner, Inc. and/or its Affiliates. All Rights Reserved. 1

2 2 Hardware Platforms Weekly, Issue 17 Hardware and Systems Focus Area Computing hardware is the foundation of information technology, and one of the largest single IT markets. It is also the market segment where IT managers and vendors face the greatest number of decisions and opportunities, and competition is toughest. Backed by intensive statistical research, this Focus Area addresses the buyers, vendors and technologies that comprise the hardware marketplace. The research and analysis provide key strategic and tactical insights to this segment's vendors, users and investors. The Hardware and Systems Focus Area can be found on Gartner Dataquest's Web page at Spotlight on Hardware and Systems Spotlight on Hardware and Systems provide an overview for a suite of Research Briefs specially commissioned to address a specific topic area. The overview and accompanying briefscanbefoundonthehardwareandsystemsfocusarea. Recent Spotlight Articles "1Q03: Hardware and Systems, Semiconductors Forecast Scenarios", 10 March "Hardware and Systems and Semiconductors Scenarios: 4Q02", 3 December "Computing Hardware Predictions, 2003", 15 November Market Highlights Workstation on the Rise Again: Shipments up for Second Straight Quarter Based on Gartner Dataquest's preliminary results, worldwide workstation unit shipments increased 3.0 percent sequentially in the first quarter of Shipments totaled just under 377,000 units, an increase of 4.3 percent from the first quarter of These preliminary estimates are based on a combination of early vendor feedback, vendor financial releases and general market trends. The final worldwide quarterly statistics are published eight weeks after the end of each calendar quarter. Gartner Dataquest Perspective With the advent of more powerful desktop PCs and the price premium that one pays for a branded workstation, it was easy to assume a few quarters ago that the workstation was a dying product. Shipments were down, revenue was way down, and there were no new technologies to spur growth in the market. But in the fourth quarter of 2002, shipments rose and the market outlook was positive for the first time in four quarters. Now, in the first quarter of 2003, the workstation market seems to be keeping up the momentum that started in the fourth quarter, as shipments are up again.

3 Hardware Platforms Weekly, Issue 17 3 Based on Gartner Dataquest's preliminary data, shipments rose by 3.0 percent over the fourth quarter of 2002, to total just under 377,000 units. This quarter marks consecutive quarters of sequential growth for the first time since the third quarter of Incidentally, the third quarter of 2000 was a very important quarter, as it also marked the last time that year-over-year growth was as positive as it was in the first quarter of 2003, rising by 4.3 percent. Vendors are hoping that this positive performance will be furthered by a rebounding U.S. economy after the surprisingly quick resolution of the war with Iraq. The rest of the world's economy remains weak, however. Japan and Europe continue to struggle, and with the growing concerns over the severe acute respiratory syndrome (SARS) epidemic in the Asia/Pacific region, some companies may find it hard to do business effectively in light of quarantines and travel restrictions. Table 1 Worldwide Workstation Unit Shipments, 1Q03 1Q02 1Q02 Market Share (%) 4Q02 4Q02 Market Share (%) 1Q03 1Q03 Market Share (%) Growth (%) 4Q02-1Q03 Growth (%) 1Q02-1Q03 Dell 141, , , HP 86, , , IBM 47, , , Sun 54, , , Fujitsu Siemens 8, , , Others 23, , , Total 361, , , Source: Gartner Dataquest (April 2003) Vendor Highlights By Anthony Kros (anthony.kros@gartner.com) Palm: Ready to Do Business in China On 22 April 2003, Palm announced the opening of its sales and marketing office in Shanghai and three products for the China market. The products are the Palm Tungsten T, Zire, and m500 with the CJKOS Chinese software system and PenPower handwriting software built into the PDA. Users will be able to choose to operate their Palm PDA in simplified Chinese, traditional Chinese or English. Retail prices for Zire is at 888 yuan (US$107) and 3,280 yuan (US$396) for the Tungsten T. All prices are inclusive of valueadded tax (VAT). Digital China has been appointed as one of its first distribution partners in China. To facilitate better after-sales service, a repair center has been set up in Suzhou as well as drop zones established in cities of Beijing, Shanghai and Guangzhou. Gartner Dataquest Analysis In 2002, the PDA market in China decreased by 32 percent over 2001 with an estimated shipment of 1,050,741 units. Looking ahead in 2003, the PDA market is trying to climb out of the trough as every vendor is struggling to find a product or solution to stimulate the market. Palm is a late-comer to the game but it has no choice but to gain a foothold in the largest PDA market in Asia/Pacific and also before local incumbents Legend Group and GroupSense, which have obtained licensing agreements with PalmSource, make major moves in the market.

4 4 Hardware Platforms Weekly, Issue 17 Besides having the channel, service and support in place, Palm has signaled a further commitment to the China market by investing in making the three products available in localized packaging as well as adopted a local brand name for Palm "Ben Mai." Palm'ssuccessishedgedon: Whether buyers are convinced on features and value that the product can offer Creating enough noise to make the product stand out among the crowed market Stimulating replacements from the existing low-end user base that might want to move up the value chain Making localized contents available Working closely with software developers to target the enterprise market with specific applications By Lillian Tay (lillian.tay@gartner.com) Client Computing Palm Launches Zire 71 and Tungsten C On 23 April 2003, Palm introduced two new models, the Zire 71 the first PDA under $300 with a built-in digital camera and the Tungsten C, offering keyboard input for and embedded wireless LAN capability, aggressively priced at $499. The Zire 71 is a breakthrough product noted for its industrial design, competitive price point, innovation and ease of use. Implementing a Video Graphics Array (VGA) camera for casual picture taking, it is a candidate for device consolidation for workers such as Realtors, insurance claims personnel and government inspectors. An MP3 player and Kinoma Player software demonstrate multimedia capabilities in the 5.3-ounce (151 grams) device. The Zire 71 uses a 144MHz TI OMAP310 processor with 16MB RAM to run Palm OS With the Tungsten C, Palm moved to Palm OS v.5.2 with 64MB of memory, and this 6.3-ounce (180 grams) device is based on the 400MHz Intel PXA255. The C is the first Palm OS device with integrated Wireless Fidelity, or Wi-Fi, and it is priced at least $100 below Wi-Fi models from Toshiba and Hewlett-Packard, but it offers longer battery life. Tungsten C suffers from some of the same awkward industrial design issues (keyboard and mouse) shown in the Tungsten W. Buyers looking for commonality between the C and W will find different operating systems and software loads. Both products offer 320x320 pixel transflective TFT color displays, a first for Palm after lagging the competition in display technology for years. Both offer Secure Digital Input Output (SDIO) expansion slots. Graffiti2 is part of the new OS, offering a more intuitive way to input alphanumeric characters. The budding Zire line will replace Palm's popular M series products and maintain Palm's competitiveness in the low-price segment. With its high-resolution display and greater memory capacity, the Tungsten C should do well in a variety of vertical applications and markets where the Palm OS is the standard.

5 Hardware Platforms Weekly, Issue 17 5 Enterprises committed to the Palm OS platform should strongly consider the Zire 71 and Tungsten C. But Palm's challenges are not alleviated by new hardware. Microsoft continuestomakeinroadsintotheenterprisemarketasitdepartmentsexertmorecontrolover enterprise standards. Palm must contend with the fact that PalmSource has enterprises potentially strung out over versions 4, 5 and 6 over the next year as it modernizes its OS and revamps its user interface. Palm's innovations, while significant, can be copied, leavingpalminneedofcontinuedinnovationeverysixmonths.althoughpalm'sannouncement of closer ties to IBM enterprise support was notable, it has not yet enabled Palm to gain as many enterprise customers as it had hoped. In spite of these issues, these products give Palm aficionados good reasons to stay committed to the company, rather than switching to Sony or Pocket PC devices. Enterprise Computing By Todd Kort (todd.kort@gartner.com) and Ken Dulaney (ken.dulaney@gartner.com) AMD Launches Opteron Processor On 22 April, AMD introduced the AMD Opteron processor, the world's first 64-bit processor compatible with the industry-standard x86 architecture. IBM joined AMD at a New York City launch event to announce plans to offer a server product for high-performance computing based on the AMD Opteron processor. At the same event, Microsoft reiterated its commitment to developing a 64-bit operating system for the processor, with a beta version available in mid The AMD Opteron processor for servers and workstations, which extends the x86 instruction set architecture (ISA) to 64-bit computing for the first time, is also the first processor in a new class of computing called AMD64. AMD64 directly follows the evolutionary path of the industry-standard x86 ISA, allowing development of a unified 64-bit computing infrastructure fully compatible with the pervasive x86 architecture. The AMD Opteron processor is designed to help eliminate barriers to 64-bit computing by simplifying the transition between current and future generations of software. AMD64 technology is being positioned to allow customers to protect their investments by continuing to use all their 32-bit software until they decide to implement new, 64-bit software. Because the established and new software can run side by side, computer systems based on AMD64 create the foundation of the industry's first unified 32- and 64-bit IT infrastructure. Among companies supporting the AMD Opteron processor at its launch were Fujitsu Siemens Computers, LucasFilm's JAK Films, Oracle, Microsoft and IBM, the first global original equipment manufacturer (OEM) to build systems based on the AMD Opteron processor. The AMD Opteron processor has achieved some record performances with industrystandard benchmarks. In Transaction Processing Performance Council Benchmark C (TPC-C) tests, the AMD Opteron processor achieved performance up to 14 percent greater than competing 32-bit server processors. On the Internet-related performance benchmark SPECweb99, the AMD Opteron processor Model 844 is the first computer processor in the world to break the 10,000 score.

6 6 Hardware Platforms Weekly, Issue 17 AMD Opteron processor Models 240, 242 and 244 for up to two-way servers are available now. AMD Opteron processors in the 800 series for up to eight-way servers will be available later in the quarter. AMD expects AMD Opteron processors in the 100 series for 1-way servers to be available in the third quarter of Prices for the 200 series of the AMD Opteron processor start at $283 each in lots of 1,000. Gartner Dataquest Analysis This may well be the most anticipated server CPU launch in recent history. While AMD has been shipping 32-bit processors that have had some limited success in the server space, the Opteron processor is positioned uniquely against the competition in offering support for both 32-bit and 64-bit applications. What also makes this different from AMD's prior server CPU offerings is some of its partnerships. Most notably, Newisys offers tested and validated server building blocks and servers themselves to potential sales partners that can provide Opteron-based platforms to end users. The participation of Microsoft and IBM in this launch also help position the Opteron processor as having potential success. While initially, the Opteron processor was being positioned to compete with Intel's Itanium products, this announcement shows that AMD is targeting the Intel architecture 32-bit (IA-32) server space with strong benchmark scores and aggressive pricing. This represents a larger market with potentially greater returns, so it appears to be a shrewd move on the part of AMD. This is a good start for a product that must demonstrate that it offers significant reliability, real-world customer application benefits, and continuing strong partnerships. If AMD can do those things in its next steps with Opteron, it may be able to keep the barriers to buying servers with this technology low enough so attract a significant number of customers to try platforms with this processor. It is apparent that AMD plans to leverage the attention that it has in the high-performance computing space with its established processor lines. It if can establish unique customer benefits in some specific workloads as it attempts to gain market traction with Opteron, its chances of significant success will be greatly enhanced. Meanwhile, there is no doubt that Intel will be watching Opteron closely. If Opteron becomes a real competitive threat, Intel may be forced to come to market with a 64-bitextended 32-bit version of its own products. That could bring a new twist (and new excitement) to the server market that Intel has dominated (in volume) for some time. Recently Published Research Asia/Pacific Router Market to Increase 6.6 Percent in 2003 By Jeffrey J. Hewitt (jeffrey.hewitt@gartner.com) Total manufacturers' revenue in the enterprise router market in Asia/Pacific is expected to grow 6.6 percent in Revenue is expected to continue growing before falling off to negative growth in (Gartner Dataquest, 24 April 2003 HARD-WW-DP-0496) Asia/Pacific: PC Market Outlook, 2003 (Executive Summary) Y2K replacement cycles, wireless connectivity and economic conditions appear as major drivers in the PC market in recent documents that examine local PC markets for 2003 in nine Asia/Pacific countries. (Gartner Dataquest, 22 April 2003 HARD-WW-EX-0382)

7 Hardware Platforms Weekly, Issue 17 7 How and Why Consumers Buy PCs in Europe (Executive Summary) Abstract: Sales of home PCs in Europe rose in 2002, despite a flat overall market. A new Gartner survey shows how market maturity, channel structure, levels of IT knowledge and local assembler presence affect the buying decision. (Gartner Dataquest, 22 April 2003 HARD-WW-EX-0374) Press.gartner.com Press.gartner.com is designed to guide you through the correct procedure of obtaining a Gartner Dataquest analyst's quote. If your company would like to issue a press release quoting one of our analysts, you must submit your request to quote.requests@gartner.com. Standard requests will be approved within 48 hours. Upcoming Gartner Conferences Gartner and Gartner Dataquest host the IT industry's most respected conferences and strategic forums in locations around the world. For more information, please contact Gartner Worldwide Events from within the United States at or visit the Gartner Web site at

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