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Stephen Shankland

Staff Writer, CNET

Intel allies Hewlett-Packard and Microsoft have some good and bad news for the chipmaker’s Itanium 2 processor family.

Hewlett-Packard is due to bring the fastest Itanium 2 processor so far to its higher-end server models on Jan. 18, sources familiar with the products said. But at the same time, Microsoft has scrapped its version of Windows for workstations using the high-end chip.

Microsoft will continue to sell Itanium versions of Windows for servers, a representative said, but for the powerful desktop computers known as workstations, the company is concentrating its energies on its “x64” operating system–the one that takes advantage of 64-bit memory extensions in Intel’s Xeon and Pentium and in Advanced Micro Devices’ Opteron and Athlon processors. Windows XP Professional x64 Edition is due to ship in the first half of the year.

The move isn’t a major surprise: Itanium co-inventor Hewlett-Packard was the sole computer maker selling Itanium-based workstations, and it discontinued the product line in 2004.

But it is a setback for the processor family, which is technologically well-suited to workstation tasks such as chip design, digital animation or aerodynamics analysis. The basic problem is that 64-bit x86 chips such as Xeon and Opteron are cheaper, said Pund-IT analyst Charles King.

“Intel’s plan is to reach price parity between Itanium and Xeon by 2007. This is one of those situations where this particular piece of the market doesn’t have two years to wait,” King said.

Intel spokeswoman Erica Fields wouldn’t say whether the company would have preferred that Itanium remain viable for workstations, but she did say Xeon is well-suited to the market. “Itanium just wasn’t a strong play in the workstation market,” Fields said. “Itanium is really focused on the high-end server market.”

Microsoft has several server software products in the works for Itanium. Among them are the Visual Studio 2005 programming tools, the .Net Framework 2005 foundation for server programs, and the SQL Server 2005 database software, the company said in a statement.

HP initiated the Itanium project in 1988 in great secrecy. The company believed that the general design of today’s high-end processors, called reduced instruction set computing, or RISC, would run out of steam. Over the last 10 years, HP has been gradually transferring the project to Intel.

However, product delays and difficulties bringing software to the processor family have hampered its debut, and competing chip families such as IBM’s Power and Sun Microsystems’ UltraSparc haven’t been swept aside.

HP remains firmly committed to Itanium servers, though, pledging a three-year, $3 billion commitment in research and marketing for its Integrity server line.

One part of that commitment will appear Jan. 18 when HP brings new top-end Itanium processors to midrange Integrity servers with eight or 16 processor sockets and to its high-end Integrity Superdome line with 32 or 64 sockets. (HP can fit as many as 128 Itanium processors in a Superdome by use of a technology called mx2 that lets a special package of two Itanium 2 processors fit into a single socket.)

The systems will be available with the newest Itanium 2, which comes with 9MB of high-speed cache memory instead of the earlier 6MB version, sources said. Intel announced the chip in November.

An HP representative declined to confirm or deny the server plans.

Several server makers sell Itanium machines, including Silicon Graphics, Unisys, IBM, Dell, NEC and Fujitsu. But HP has the strongest dependency on Itanium, which is vital to simplifying the company’s high-end server plans.

HP is phasing out its PA-RISC chips that power servers using its HP-UX version of Unix. A single Itanium server can run not just HP-UX and Windows, but also Linux, and soon, HP’s rarely used but highly regarded OpenVMS operating system that currently runs on another chip family headed for extinction, Alpha. Finally, HP is moving its super-high-end NonStop line from MIPS processors to Itanium.

But Itanium failed to meet Intel’s 2004 shipment goals. The chipmaker shipped more than 100,000 in 2003 but didn’t successfully double that in 2004.

“What seems to me to have been happening over the last 18 months is the increasing trend of retrenching Itanium into a smaller, higher-end section of the market,” King said. “The smaller the market, the longer it’s going to take to recoup all those investment dollars they put into Itanium in the first place.”