As businesses have reined in spending on technology, the server hardware market has been badly hit. Analyst group IDC believes the total market for server hardware will decrease by 9% in 2002, compared with 2001.

But one area that has and will continue to benefit from the downturn is the Standard Intel Architecture Server (SIAS) server market. According to IDC’s latest quarterly server forecast, this sector will grow by 4.7% to be worth $5 billion in the third quarter of 2002. This is because Intel-based servers, particularly those running the open source Linux operating system, are far cheaper to acquire.

“Customer demand has shifted substantially to buying smaller increments of infrastructure capacity, fuelling growth in the volume server market and continuing to create a very aggressive pricing and competitive environment in the midrange and high-end segments,” explains Mark Melenovsky, IDC’s program director for server and infrastructure hardware research.

Despite its current doldrums, IDC predicts that the overall market for servers will begin to achieve positive growth in the long-term, producing a compound annual growth rate of 3% over the next five years. The total server market will be worth $63.4 billion in 2006, according to IDC.

Sustaining this growth will be sales of Linux-based hardware, which are expected to triple to $6.5 billion in 2006. Sales of Microsoft-based server platforms will also rise, up almost $5 billion to $19 billion.

Servers based on proprietary, RISC-based processors, which tend to be more expensive, will increase their presence among high-end systems. By 2006, says IDC, RISC-based hardware will contribute approximately $27.7 billion to total server sales, despite competition from Linux and 64-bit Intel server platforms.