Re: Intel Article in Business Week Magazine
From: Barry Treahy, Jr. (Treahy_at_MMaz.com)
Date: 03/02/04
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Date: Tue, 02 Mar 2004 07:21:16 -0700
Hal Kuff wrote:
>An artcile in this week's magazine seems to say that Intel is walking away
>from Itanium, at least for awhile....
>
>
>
What a shocking surprise meaning that HP has been either blind,
ignorant, or deceptive.... Here is the article and though it really
doesn't state anything new that hasn't already been hammered on this
list, it does reaffirm doubts about HP:
Goodbye To The Chip Of The Future?
When Intel (INTC <javascript: void showTicker('INTC')> ) and
Hewlett-Packard (HPQ <javascript: void showTicker('HPQ')> ) released the
Itanium server chip they had jointly developed three years ago,
detractors quickly labeled it "the Itanic." Delivered two years late and
at a cost of $2 billion, the chip was billed as the future of computing
because it could process data 64 bits at a time, twice the amount of
other chips. But Itanium performed poorly on its maiden voyage, chewing
through data even more slowly than Intel's own 32-bit chip. Potential
customers gave it a chilly reception, especially because so little
software could take advantage of its 64-bit capabilities.
On Feb. 17, Intel Corp. Chief Executive Craig R. Barrett sank Itanium's
last hopes for gaining broad success. He announced that Intel will
reconfigure its own 32-bit chips, the Xeon for servers and the Pentium 4
for desktops, so that by midyear they also will be able to process
64-bit software. With Intel throwing its weight behind other products
that can handle 64-bit applications, Itanium looks doomed to niche status.
The Itanium experience is a timely reminder of how Intel's culture may
make it challenging to expand into new markets. The company's forays
into consumer electronics and communications depend on its ability to
cooperate effectively with other companies. But Itanium is a symbol of
the go-it-alone arrogance of the company's past. When Intel was
developing the chip, critics outside and even inside the company said it
was unreasonable to require software companies to rewrite millions of
lines of code so their software would run at 64 bits. Indeed, that
became a critical flaw. Although Intel is showing signs now of becoming
more humble, such miscues mean it will have to work hard to win over
potential customers.
No question, Barrett needed an alternative to Itanium. Last April, rival
Advanced Micro Devices Inc. (AMD <javascript: void showTicker('AMD')> )
began selling its Opteron server chip, which can handle both 32-bit and
64-bit applications. The flexibility helped Opteron grab 3.9% of the
mainstream server market by December, according to researcher IDC. "It's
not 64 bits that most people want right now. It's performance and
value," says Peter N. Glaskowsky, editor in chief of /Microprocessor
Report/.
Even Hewlett-Packard Co. is hedging its bet on Itanium. On Feb. 24, HP
revealed that it will begin selling servers with AMD's Opteron alongside
Intel's products. Chief Technology Officer Shane V. Robison says HP's
relationship with Intel is "the deepest partnership in the industry" but
adds that customers have been demanding more choices in the servers they
buy.
How did AMD outmaneuver Intel? The plucky underdog bet that existing
chip technology would continue to double its performance every 18 months
-- just as Intel co-founder Gordon E. Moore had predicted in what became
known as Moore's Law. Although Intel also believes in Moore's Law, it
felt the Itanium architecture would be superior. AMD's gamble paid off.
In the 10 years since Intel announced it would develop chips for 64-bit
applications, 32-bit chips have grown to account for 91% of the server
market.
Now Intel is making up for its misstep. It still holds 96% of the
mainstream server market, according to IDC. And by adding 64-bit
extensions to its Xeon line, it has the option of starting a price war
if AMD makes more headway with corporate customers. The move helped keep
Dell Inc. (DELL <javascript: void showTicker('DELL')> ), the world's
second-largest server seller, from defecting to AMD by giving it a 32-
and 64-bit product to sell against Opteron offerings from Sun
Microsystems (SUNW <javascript: void showTicker('SUNW')> ), IBM (IBM
<javascript: void showTicker('IBM')> ), and HP. Dell President Kevin B.
Rollins says his company has no plans to use AMD chips.
By developing an alternative to Itanium, Intel looks plenty capable of
defending its server dominance. But the chip of the future doesn't have
a very bright one.
By Cliff Edwards in San Mateo, Calif.
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