The buying slowdown that pummelled PC sales during the fourth quarter bypassed higher-margin systems, analysts say. Dataquest Monday reported worldwide server shipments rose 21 percent in the fourth quarter from a year earlier, while workstations posted a more modest 11.3 percent gain. Servers tied with notebooks, which also beat the sales slowdown. This compares with fairly dismal PC shipments, which had, until midyear, posted strong double-digit growth. During the fourth quarter, Dataquest put worldwide PC shipments up a paltry 1.6 percent. For 2000, IDC concluded PC shipments grew only 0.3 percent over the previous year. Server shipments rose 14 percent year over year and workstations rose 11 percent during 2000, Dataquest concluded. Worldwide server shipments reached 3.9 million for the year, with 1.1 million units going out in the fourth quarter alone. The US server market plowed past the economic slowdown, with 32 percent growth during the fourth quarter 2000 over the same period a year earlier. "Most of the growth in the United States has been fueled by e-business and a resulting demand for front-end Web, Web application and database servers," Dataquest analyst Jeffrey Hewitt said in a statement. Sun Microsystems and Dell saw phenomenal server growth -- 61.2 percent and 42.2 percent, respectively -- last year compared with 1999. Compaq, the volume mover, passed the 1 million mark for the first time. Compaq led the worldwide server market in 2000, with 27.1 percent market share, down from 28 percent a year earlier. Compaq server shipments rose 10.7 percent from 1999. IBM captured a far-distant second place, with 16.7 percent, down from 17.3 percent a year earlier, and 10.8 percent growth. Compaq shipped nearly 1.1 million servers in the quarter compared to IBM's around 658,000 units. Third-ranked Dell, with 14.6 percent market share, shipped about 573,000 servers last year. Hewlett-Packard saw modest growth of 4.2 percent and a decline in market share: 11.2 percent from 12.3 percent a year earlier. HP shipped about 440,000 servers. Palo, Alto, California-based Sun pulled up the rear, gaining market share -- 7.3 percent from 5.2 percent in 1999 -- and shipping nearly 287,000 servers. Dataquest also noted that component shortages affecting supply in earlier quarters had virtually disappeared in the Intel-based server market. Still, the server sales situation is not all rosy. Market leader Compaq reported sales of its Intel-based ProLiant servers grew only about 25 percent during the fourth quarter, down from more than 40 percent growth the two previous quarters. This could indicate a slowing sales trend for the overall market. "Because of the length of typical server purchase cycles, the next two quarters will be critical in assessing the impact of the current economic situation on the server market," Hewitt said. Number two IBM is navigating an important product transition as it rebrands its server line and starts selling the long-awaiting G7 mainframe. At the same time, a crippling shortage of ceramics used in chips has prevented the Armonk, NY-based company from meeting demand for some of its most profitable, high-performance systems. Round Rock, Texas-based Dell, for the first time, pushed ahead of Sun in workstation shipments: 382,000 units to 357,000. Dell captured 23.1 percent of the market, up from 16 percent in 1999, with whopping 60.3 percent growth. Sun's share rose slightly -- 21.7 percent compared with the previous year's 21.6 percent -- to 11.3 percent growth. HP fell to third place as the company continued its workstation decline, down 7.2 percent from 1999 with shipments of about 290,000 units. The Palo Alto, California-based company's market share dropped to 17.5 percent from 20.9 percent a year earlier. Compaq shipped about 230,000 workstations, for growth of 10.6 percent. But the Houston-based PC maker's share declined slightly year over year to 13.9 percent from 14 percent. IBM fell to fifth from fourth place, with 176,000 unit shipments -- down 19.1 percent from a year earlier. The company's market share plummeted to 10.7 percent from 14.6 percent in 1999. Combined, computer manufacturers shipped 1.6 million workstations in 2000, Dataquest concluded. For the fourth quarter, the segments 11.3 percent growth rebounded from a weak third quarter, when workstation shipments grew a modest 3.9 percent. Workstations differ from PCs in a number of areas, the most important being two-processor capability. While not a mandatory facet of the category, the capability of using a second processor has been a distinguishing feature. Workstations also tend to offer beefier graphics, support for two monitors and more robust storage offerings, such as SCSI or RAID. The systems are typically used for demanding tasks, such as computer aided design (CAD), software development or video production, among others. Dataquest concluded that the introduction of the Pentium 4 processor, which offers enhanced audio and multimedia performance, could be a boost for the workstation market. But because Intel introduced Pentium 4 late in the fourth quarter, "the shipments were only in the hundreds", Dataquest analyst Pia Rieppo said in a statement. While Dataquest expects Pentium 4 sales to pick up during the first half, one defect could hurt sales: Intel does not yet offer chipsets enabling multi-processor Pentium 4 systems. This represents "a significant change in product positioning since dual processor scalability is a key component of current IA workstation definition", Rieppo said. "Many end users may bypass these workstations and wait until the dual-processor chipsets and the Pentium 4 Xeon CPU arrives this spring," she concluded. Dataquest warned that workstation sales in the United States, which accounts for more than half of shipments, could be weak during early 2001 because of the Pentium 4 situation, socioeconomic conditions and other factors. Overall, a dark cloud hangs over workstation and server sales during 2001: two important product transitions coming later in the year. Intel around midyear is expected to release its long-anticipated and much-delayed Itanium processors, which will be used in servers and workstations. Typically, pending new products slow or stall sales. IBM, for example, saw S/390 mainframe sales plummet 24 percent during the third quarter in anticipation of the z900 server. Big Blue shipped the server in mid December. More troubling may be the release of Microsoft's next version of Windows, codenamed Whistler. The new operating system, rumoured to be called Windows XP, won't come out until several months after Itanium's release. While Microsoft plans an interim 64-bit version of Windows 2000 for Itanium, the operating system confusion could conceivably hurt workstation and server shipments during the second half. Have your say instantly, and see what others have said. Click on the TalkBack button and go to the ZDNet News forum. Let the editors know what you think in the Mailroom. And read other letters.