HP anniversary: Jury still out on HP's Itanium server bet

Hewlett-Packard faces an overhaul in its high-end servers that analysts say could be a big factor in determining whether the...

Hewlett-Packard faces an overhaul in its high-end servers that analysts say could be a big factor in determining whether the acquisition of Compaq is ultimately successful.

Both pre-acquisition HP and Compaq decided to abandon their own server chip architectures in favour of Intel's fledgling Itanium 64-bit processor. Now that the companies are united, they must work to move a massive installed base of PA-Risc and Alpha chip users to the new platform from Intel.

This technology shift is made more daunting by the economic downturn and HP has a long way to go before its Itanium bet pays off, according to some industry analysts.

"I continue to question the efficacy of their high-end server strategy," said Ed Broderick, principal analyst at the Robert Frances Group. "I am concerned about continuing problems and delays in rolling out Itanium ... for its traction in the marketplace."

Offloading chip design costs to Intel, in theory, will help it in the long run even though Itanium requires large amounts of software tuning up front.

HP is counting on Itanium to do for the high end what Intel's Xeon server processor has done for low-end systems, and to become a near commodity-priced processor. For years, the company has said that the move to Itanium is a key to its future.

However, it faces scepticism from both analysts and users who say now is not the right time to ask users to switch high-end chips.

"It's a really tough market right now not only to sell into but especially to introduce a new platform into," said Charles King, senior analyst at the Sageza Group.

King noted that Itanium's take-off might actually be slowed, ironically, as a result of the Compaq acquisition. "It's a small club producing Itanium servers," King said. "By reducing two large members into one, you have at least the public sense that only one major company is actively supporting Itanium."

Lackluster support for the Itanium 2 chip from Dell Computer and IBM, which have yet to release servers with the processor, does not help HP's situation, King said.

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