Reversal Of Fortune For Server Vendors

All you need to know about how fierce the competition is in the entry-level sector is that the four top companies finished in the exact opposite order as they did in 2002. This year, Hewlett-Packard used significant advantages in product innovation, support, partnership and loyalty to top Sun, IBM and Dell. (Sun and IBM tied for second place.)

The market-share numbers bear out the results.

In late summer, HP announced that market researchers Gartner and IDC had tabbed the company's ProLiant and x86 rack-optimized servers as No. 1 in their sectors. HP has seized the lead largely by capitalizing on changing customer buying habits.

"CIOs are being asked to do more with less, so there has to be a tangible benefit to everything they purchase," says Kerry Gerontianos, president of Incremax, a New York-based systems integrator.

With that in mind, what customers seek are devices they can integrate well and rely on to run smoothly, especially in small businesses with less established networks. If VARBusiness' 2003 Annual Report Card rankings are any guide, HP's market supremacy has a lot to do with how solid its products are. The company scored category highs in both product quality/reliability and compatibility and ease of integration. It goes without saying that those characteristics are crucial to devices that act as network cornerstones.

"VARs offer a good indicator of what customers are buying in all categories, and lately there has been a trend toward the SMB space," says Steve Bowsher, general partner with venture capital firm InterWest Partners.

Last year, Dell's strong product reliability score helped vault it to the top of the ARC rankings. But VARs say the company declined this year, suggesting Dell's inability to capitalize on whatever initial enthusiasm VARs might have had about its channel program. Dell's low score for product loyalty further indicates this. The company may not have had as much time to build the kind of channel ties its competitors enjoy, but the U-turn from last year's results indicates that longevity is less important to partners than execution.