San Jose Mercury News

SAN JOSE, Calif. – It’s make-or-break time for Itanium, one of the most expensive and complex families of computer chips ever made by the world’s biggest chip maker, Intel.

On Tuesday, Intel will debut a new version of the Itanium that has two computing brains grafted together on one chip. It’s not clear how much this brain surgery will help the chip attract customers.

Many chip experts have already written off Itanium as a failure. Even before it debuted five years ago, industry wags coined the term “Itanic” for the chip. The theme of a sinking ship has stayed with Itanium since then as many customers have decided it is inefficient, expensive and not worth the trouble of upgrading to newer software and hardware.

Intel says it has won over customers, including 70 of the 100 largest companies that have bought computers running on Itanium, compared to just 40 about 18 months ago.

Some observers still say the Itanium has still fallen short.

“It’s a dog in terms of living up to its original purpose,” said Clay Ryder, an analyst at the Sageza Group, a market analyst firm. “They have spent billions of dollars on it. But at this point, it is about saving face. They are in such a deep hole, they can’t back out of it.”

The new version of the Itanium chip, code-named Montecito, has more than 1.7 billion transistors, the tiny switches that are the building blocks of chips. Intel says it believes it will spark a revival for Itanium.

But others have wondered if, as Intel proceeds with a ruthless cost-cutting program, Itanium may not survive. If it is canceled, it would be the biggest failure in the history of the Intel, if not the history of computing itself.

Intel executives say they’re not about to abandon Itanium. “The demand is very strong,” said Pat Gelsinger, senior vice president of digital enterprise platforms at Intel. “We have gone through some dark years. It’s the third horse in the race and gaining market share.”

Intel and Hewlett-Packard started jointly designing the first Itanium chips 12 years ago as the path to the future of all computing. They felt that older chip architectures were going to run out of steam. The project ran behind schedule and many wrote it off when Intel decided to target the chip for high-end computing instead of mainstream computers when it launched the chip in 2001.

Because Intel has invested so much in it and has crafted alliances with so many computer makers and software companies to sell products that run on Itanium, analysts believe that Intel will keep supporting the chip despite the company’s current campaign to cut money-losing programs.

Fellow partners such as Dell and IBM have abandoned Itanium. HP has stayed the course, accounting for about 80 percent of Itanium system sales.

But in the last year, Itanium has lost some momentum, particularly because Montecito is being released nine months late. After a few years of making gains, Itanium machines fell on the list of the top 500 supercomputers from 80 machines last year to 40 this year.

When Intel began designing Itanium, bigger and beefier microprocessors were still in fashion. The company wanted to double the amount of data its chips could compute. The company felt that was how Intel could move from personal computer chips to replace the rival chips in the highest-performance supercomputers and servers in corporate data centers.

But Intel failed to consider just how much customers wanted to hang on to their older software.

And just as Detroit carmakers failed to recognize fuel-efficient car trends in the 1970s, Intel didn’t see how much computer customers would begin to care about power efficiency.

The chip fell behind schedule and finally launched in 2001, right in the middle of a recession.

Advanced Micro Devices, Intel’s archrival, saw a chance to make customers happy without forcing them to spend a lot of money upgrading to Itanium systems.

In 2003, AMD released the Opteron microprocessor. The timing was much like the arrival of the hybrid vehicle at a time when consumers started caring about fuel efficiency. Intel had to follow AMD’s lead, and today Intel’s Xeon server chips are far more popular than the Itanium chips.

(EDITORS: BEGIN OPTIONAL TRIM)

AMD now has nearly 20 percent of the server chip market, compared to almost nothing in 2003.

Intel says a number of computer makers – NEC, Fujitsu, Hitachi and Unisys – have joined HP in shipping machines run on Itanium. But HP has about 80 percent of the Itanium business, a sign that support for the chip isn’t all that widespread.

(END OPTIONAL TRIM)

Power efficiency has become much more important, particularly in data centers where the cost of electricity is soaring and is now one of the biggest concerns. Now Intel has had to spend time designing versions of the Itanium that don’t consume as much electricity, but it has handicaps in that area versus its competitors.

“Intel was very late to this game of eco-friendly computing,” Armstrong said.

Plenty of Itanium customers and computer vendors disagree. Dave Parry, senior vice president at SGI, says, “I think Itanium is coming into its own in the markets that Intel has targeted. You’ll see a lot of demand with the launch of Montecito.”

—

(c) 2006, San Jose Mercury News (San Jose, Calif.).

Visit MercuryNews.com, the World Wide Web site of the Mercury News, at http://www.mercurynews.com.

Distributed by McClatchy-Tribune Information Services.

AP-NY-07-17-06 1531EDT