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The fourth quarter of 2010 saw the workstation market take a noteworthy step forward in its journey back from recessionary lows, setting a new high water mark for quarterly unit volume. Worldwide, the industry shipped 903.7 thousand workstations, representing a solid - yet still moderate - 6.4% sequential gain.
Continued tempered growth should bode well for the workstation market, by reducing the potential for a second dip, a dip the related market for professional graphics couldn't avoid in the previous quarter. Workstation-class GPUs had bounced back from its lows far more strongly than workstations in the first half of 2010, but suffered from a case of indigestion in the second half as OEMs' orders appeared to run a bit too fast for actual demand.
Professional graphics a leading - and more volatile - market indicator for workstations
With professional graphics shipments most often a short-term prognosticator for the fortunes of workstations, the former's recent history raised concern we might see the latter experience its own double-dip. But the sell-in side of the market (and the majority of professional graphics ship via OEMs) historically has seen see wider swings than the sell-out, leaving hope that the workstation sales curve might iron out this last pothole seen in graphics. And with numbers for the third and fourth quarter coming in more restrained, it's looking likely that's that case, with workstations avoiding any second sustained, non-cyclical drop in the near term.
HP makes its case for number one ... again
Today representing a virtual duopoly in the global market for workstation, HP and Dell had spent the several previous quarters jostling for market leadership, each taking a turn with slim volume leads, with neither seizing a sustainable advantage over the other. HP, which just five years ago trailed Dell by nearly 12 percentage points, had steadily closed the gap and over the last two quarters again managed to edge out its rival. And in the fourth quarter, HP surged past Dell with a bit more vigor, putting Dell four points behind and suggesting that this time around, its lead is looking less like a short-term aberration and more like a long-term changing of the guard atop the workstation market.
Professional graphics market flat, and that's not such a bad thing
The third quarter decline in professional graphics units was followed by a flat fourth quarter, with Nvidia and AMD combining to ship around 1.1 million units. But while a lack of growth would normally be disappointing, in the context of the previous quarters, some temporary sluggishness isn't all bad. Rather, stability in this case appears to be a sign the sell-in and sell-out rates are reaching a healthier equilibrium and should set the stage for a resumption of growth in the first quarter numbers for 2011, especially considering the industry has been gearing for a host of new high-volume entry-class models based on Intel's new Sandy Bridge generation of processors.
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With more than 25 years of engineering, marketing and management experience in the semiconductor industry, Alex Herrera is a consultant focusing on high-performance graphics and workstations.
Author of frequent articles covering both the business and technology of graphics, Alex currently maintains a role as senior analyst for Jon Peddie Research, where he authors the Workstation Report series.