Workstation Market Booms in the Second Quarter

Published: October 24, 2006

by Timothy Prickett Morgan

For two decades now, a workstation has meant a high-end PC, the kind of high-performance machine that most of us do not have on our desks and that many of us wish that we did. Today's workstation is, in many ways, tomorrow's PC. And the fact that the workstation market keeps growing and evolving seems to suggest that our appetite for more performance and sophisticated capability has not abated in 20 years.

According to market research performed by Jon Peddie Research, the worldwide workstation market continued to be robust in the second quarter of 2006. Workstation shipments peaked above 619,000 units, including X64 and RISC products, and these machines generated about $1.5 billion in revenues.

JPR believes that Intel has, despite its troubles in the past two years, remained the dominant supplier of workstation processors, with over 92 percent of the workstations shipped having an Intel chip under the metal skins. Hewlett-Packard has been making gains on Dell, which had 41 percent share of workstation shipments, thanks to HP's early adoption of Opteron workstations, according to JPR. Advanced Micro Devices has been able to parlay the better performance and higher bandwidth of its Opterons into workstation sales.

"A good chunk of Opteron's growth in workstations had been coming at Intel's expense," said Alex Herrera, the JPR senior analyst and the author of the firm's latest workstation report. "But the worst looks to be over for Intel, as the new generation Xeon platform appears to be holding on to market share."

The other trend that JPR tracks is the add-on graphics card market, and its statistics for the second quarter of 2006 suggest that rather than expecting price/performance improvements, the professional graphics card segment accounted for 869,100 units, up 37.3 percent, which worked out to $284.1 million, up 15.4 percent. JPR says that PC and workstation buyers are opting for high-end ($950 to $1,500) and very high end (over $1,500) graphics cards to boost the graphics performance of their machines. Two years ago, the high-end and very high-end graphics cards accounted for only about a quarter of add-on graphics card sales, but today it makes up more than half of revenues. People are basically deciding to spend more than they would on entry and midrange 3D graphics cards two years ago (which made up about half of sales) to get more visual oomph. Customers still sometimes choose 2D graphics cards, but the share of revenue that these contribute to the graphics market is dwindling.

Nvidia accounted for 72 percent of add-on graphics card shipments in the second quarter, with ATI Technology getting 24.4 percent. ATI will soon be part of AMD, but it is interesting to note that Nvidia's share of the high-end graphics card business stood at 82.7 percent of revenue in the second quarter. No wonder everyone is speculating that Intel might buy Nvidia.