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IDF Spring 05 What's the key to Itanium's future success? Cheap, Asian labor.

HP and Intel have decided to tap Asian server design and manufacturing teams to come up with a low-cost Itanium server. This approach, similar to that used for today's x86 servers, would bring the cost of a low-end Itanium server down from about $10,000 today to close to $4,000 in 2007.

"We are working with Intel to drive costs down," said Don Jenkins, HP's VP in charge of business critical systems, at the Intel Developer Forum event held here. "In the 2007 timeframe, we will be able to more actively play at edge of the network . . . places where you expect x86 servers."

HP and Intel plan to deliver a common chipset for Xeon and Itanium processors by 2007, which should help lower overall system costs. The plan mentioned by Jenkins extends beyond this, however. During a speech here, he said twice that HP and Intel had already started investing in Asian design houses that will be expected to create cheap Itanic kit.

Itanium's sluggish sales haven't dampened HP's enthusiasm for the chip. And how could they? HP "bet the company" on Intel's 64-bit product.

In the near term, Jenkins told the IDF crowd to expect a whole new fleet of Itanic boxes described as the "Arches" systems. The Arches code-name refers to HP's upcoming chipset for Itanium servers, which will support the PA-8900 processor and Intel's dual-core version of Itanium code-named Montecito due out by year end.

"We won't get all of the systems out the door in 2005, but we will get a fair chunk of the Montecito products out the door in 05," Jenkins said.

HP will also rollout a Itanium-based blade system in early 2006. This product will be aimed at HP-UX users, Jenkins said.

Jenkins, who has given a similar Itanium speech for many years, did a nice job of defending the chip against its painfully slow sales.

"It's fundamentally true that over the long-term x86 and Itanium will be the dominant architectures in the industry," Jenkins said. "We have a long way to go with Itanium. We know that. We are building it brick by brick."

By brick, by brick, by brick.

"Companies like SGI, Unisys and NEC are helping to make the market with Intel, and others will get involved over time," he added.

This statement would be more impressive if the vendors mentioned above had any Itanium sales of consequence. In the fourth quarter, SGI shipped 318 systems, Unisys shipped 46 and NEC shipped 75. Less than 500 boxes per quarter does not an ecosystem make.

Jenkins also lost some ground when he tried to explain why IBM's Power5 wasn't as powerful as it seemed to be. He looked at IBM's TPC-C score of more than 3m transactions - triple that of HP's best score - and noted that if IBM used 1.65GHz chips instead of 1.9GHz chips and didn't use DB2 for the benchmark, its score would have been 25 per cent lower. HP researchers also discovered that they could have beaten IBM on the benchmark had the Power5 box not been plugged in. ®

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Intel misses Itanium sales mark by $26.6bn
Is IBM shutting down its Itanium shop?
Intel puts Itanium saviour on ice

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