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Worldwide Server Market Posts Fourth Consecutive Quarter of Year-on-Year Revenue Growth, Reflecting Improved Climate for IT Spending, Says IDC

28 May 2004

Football Betting Spread FRAMINGHAM, Mass., May 28, 2004 According to IDC's Worldwide Quarterly Server Tracker, factory revenue in the worldwide server market grew at 7.3% year-over-year to $11.5 billion in the first quarter of 2004, marking the fourth consecutive quarter of positive overall growth. It was also the second consecutive quarter in which all major categories of the worldwide server market grew when compared to the same period in the previous year.

Nuance s second quarter results reflect a continuation of the trends we observed in recent quarters including strong revenue growth across our diverse speech markets, earnings growth enabled by synergies and budgetary discipline, and a record quarter in cash flows from operations, said Paul Ricci, chairman and CEO. The Company experienced solid growth in each of its business lines and, in particular, enjoyed robust growth in healthcare and embedded speech.

Commodity Spread Trading The breadth of growth shows that demand for server systems is on the rise, although seasonal variations caused first-quarter revenues to be less than fourth-quarter revenues. "IT spending is clearly trending upward and IT organizations are beginning to rebuild their computing infrastructure, said Vernon Turner, group vice president of Global Enterprise Server Solutions at IDC. "Following nearly three years of slowed spending during the economic downturn, we see that server systems are a priority in these rebuilding efforts." Top Server Market Findings

• Strong year-over-year unit shipment growth of 22.4%.
• Dell and Sun Microsystems were in a statistical tie for the number 3 spot in the rankings of server vendors, based on worldwide factory revenue results that differed by less than 1%.
• Linux server sales grew revenues at 56.9% and unit shipments at 46.4%, the seventh consecutive quarter of double-growth revenue growth.
• Windows servers posted double-digit growth, as revenues grew 16.4% and unit shipments grew 26.5% in year-over-year comparison.
• Building on fourth quarter gains, IBM's mainframe servers showed market strength in the first quarter of 2004, with 33.7% revenue growth and 41.8% unit growth, compared with the first quarter of 2003.
• Unix server revenue declined slightly, dipping 3% worldwide year-over-year; but Unix server revenues showed growth in Japan and Asia/Pacific, where Unix-based IT infrastructure and telecommunications are expanding.

Overall Server Market Standings, by Vendor

• IBM held on to its number 1 spot in the worldwide server systems market with 29.7% market share in factory revenue while growing factory revenue by 20.5% compared to 1Q03.
• In terms of unit shipments, HP was the number 1 vendor worldwide. In terms of factory revenue, HP took the number 2 spot with 26.9% share, growing revenue 3.8% compared to 1Q03.
• After growing server market revenue every quarter since 2001, Dell pulled even with Sun. Because factory revenue results differed by less than 1%, Sun and Dell were in a statistical tie for third place in 1Q04. Sun has held the number 3 spot in the worldwide server market since HP merged with Compaq in May, 2002.

x86 Industry Standard Server Market Dynamics

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Nfl Betting Spread The x86 server market dynamics continued to be strong in 1Q04. Factory revenue grew 14.1% to $5.1 billion worldwide, while unit shipments grew 23.5% to more than 1.3 million servers worldwide. "The strong growth of x86 servers can be linked to their use across a wide range of computing workloads, combined with a very strong software and hardware replacement cycle," said Mark Melenovsky, research director of IDC's Global Enterprise Server Solutions. "New x86-64 servers, which support both 32-bit-and 64-bit applications, showed 35.1% sequential growth in unit shipments. Although this category accounted for less than 2% of the total x86 market in Q104, this space is expected to expand rapidly by 2005, given Tier 1 OEM support for AMD's Opteron processor, Intel's February announcement of 64-bit extensions, and x86-64 platform support for 64-bit Windows and 64-bit Linux for both technical and commercial applications." Linux Servers Near the $1 Billion Mark in Quarterly Revenue

Revenues for the quarter ended March 31, 2004 were $39.2 million. These first quarter results represent 73 percent growth over revenues of $22. ago quarter. "Q1 was another great quarter as our investments in technology, site experience and marketing paid off. year, outpacing the query growth for the search market as a whole, " said Steve Berkowitz, CEO of Ask Jeeves, Inc. "We also executed on important initiatives that we believe will help drive our future growth. We announced the acquisition of Interactive Search Holdings, which is expected to double our market share, and we improved Ask Jeeves' search technology, Teoma, making its search results even more relevant to our users."

Advanced Commodity Spread This is the second consecutive quarter in which Linux servers have posted more than $900 million in worldwide factory revenue, nearing the $1 billion mark. Compared with 1Q03, Linux servers showed 56.9% growth, while unit shipments grew 46.4%. IDC notes that Linux server revenue and unit shipments have grown at double-digit rates since the second half of 2002. "Despite past concerns about Linux scalability and its suitability for enterprise applications, the data shows that the market continues to invest strongly in Linux servers," said Jean S. Bozman, research vice president, Global Enterprise Server Solutions. "Linux servers are playing increasingly important roles in IT customers' computing infrastructure. They are taking on enterprise workloads, now that more ISV applications are available for both technical and commercial workloads on the Linux server platform." Windows Market Shows Strong Growth; Unix Market Declines

Secure Corporation achieved accelerated, 11% quarter over quarter growth rate in its strategic Internet Service Provider (ISP) business during Q2. The overall Q2 revenue growth was also strong and increased by 18% compared to the same quarter last year, reaching a record level of ' 3.3m. EBIT was healthy at 16% of revenues, and ' .7m.

Betting Exchange Spread The Windows server market showed strong growth, with factory revenues increasing by 16.4% year-over-year and unit shipments gaining 26.5%. Overall, Windows servers accounted for $3.8 billion in the first quarter, representing 32.7% quarterly server market revenue. In contrast, the Unix server market declined 3% in revenue, year-over-year, on a worldwide basis to $4.1 billion. Even as Unix revenue declined in the U.S. and in Western Europe, Unix server sales grew in Asia/Pacific, Japan, and in other geographies, reflecting growth in Unix-based IT infrastructure related to telecommunications, government and business. HP gained the number 1 spot in the Unix server market, with 31.1% market share in terms of revenue, while Sun was second with 28%. IBM followed with 25.2% revenue share. Summary

Stock Spread Trading The worldwide server market continues to show signs of a strong recovery, with four consecutive quarters of growth in factory revenue. The business climate has changed dramatically since the economic downturn when vendors pushed technology to an economic recovery when customer demand is surging. The server-market landscape is undergoing major change as the influence of new technologies, including Linux, clustering, and server blades, is forging new deployments of IT infrastructure. Top 5 Corporate Family, Worldwide Server Systems Factory Revenue, First Quarter of 2004

Online Spread Betting (Revenues are in Millions)

Vendor	Q1 2004 Revenue	Market Share	Q1 2003 Revenue	Market Share	Revenue Growth 2004/2003
IBM	$3,413	29.7%	$2,831	26.4%	20.5%
Hewlett-Packard	$3,101	26.9%	$2,988	27.9%	3.8%
Sun Microsystems	$1,174	10.2%	$1,341	12.5%	-12.5%
Dell	$1,128	9.8%	$994	9.3%	13.5%
Fujitsu/Fujitsu Siemens	$925	8.0%	$892	8.3%	3.7%
Others	$1,768	15.4%	$1,679	15.7%	5.3%
All Vendors	$11,508	100.0%	$10,725	100.0%	7.3%

Complete Guide Spread Trading IDC's Worldwide Quarterly Server Tracker, May 2004

Betting Horse Racing Spread IDC's Server Taxonomy

Low Spread Forex Trading IDC's Server Taxonomy maps the eleven price bands within the server market into three price ranges: volume servers (servers priced less than $25,000), midrange enterprise servers ($25,000 to $499,999), and high-end enterprise servers ($500,000 or more). The revenue data presented in this release is stated as factory revenue for a server system. IDC presents data in factory revenue to determine market-share position. Factory revenue represents those dollars recognized by multi-user system and server vendors for ISS and upgrade units sold through direct and indirect channels and includes the following embedded server components: Frame or cabinet and all cables, processors, memory, communications boards, operating system software, other bundled software and initial internal and external disk shipments.

Sport Spread Betting IDC's Worldwide Quarterly Server Tracker is a quantitative tool for analyzing the global server market on a quarterly basis. The Tracker includes quarterly shipments (both ISS and upgrades) and revenues (both customer and factory), segmented by vendor, family, model, region, operating system, price band, CPU type, and architecture. For more information, please contact Hoang Nguyen at 508-935-4718 or hnguyen@idc.com.

Trading Spread And Seasonals To purchase this document, call IDC's sales hotline at 508-988-7988 or email sales@idc.com.

Arbitrage Spread Trading Contact For more information, contact:

Betting Guide Insider Sports Jean Bozman
jbozman@idc.com
650-962-6429

Betting Spread Successful Hoang Nguyen
hnguyen@idc.com
508-935-4718

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