Intel's New Technology: The Itanium 2

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Itanium 2 processor, microprocessors, high-end enterprise, business intelligence, databases, enterprise resource planning, SCM, computing, computer-aided engineering

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Launching Itanium 2

Intel is concerned that it is launching Itanium 2 amidst the deepest slump in the history of the IT industry. The company's revenues—projected at about $26 bn for 2002 were 25% lower than in 2002. Neither Intel's sales nor the fortunes of its largest customers'showed signs of improvement. Corporate customers have drastically reduced their IT budgets and were less inclined to adopt or even test new technologies. As a result, Intel stock is down 80% from its all-time high of $74.87 in 2000.

There were reports that customers of many companies have not shown enough curiosity about Itanium 2 to justify a major shift in they designed their products. The lack of urgency from corporate customers is reflected in the plans of Intel's major partners. HP, IBM, Fujitsu and others would release new Itanium 2 machines by early 2003. By the end of 2002, Dell is still debating whether to release Itanium 2 machines, while Microsoft has yet to release a final version of its Windows server operating system for the Itanium family. Intel estimated that volume sales would not take-off until late 2003 with the release of Itanium 2's successor, a chip code-named Madison. Despite the failure of Itanium I, Intel is confidant Itanium 2 would succeed.

Intel wielded a larger manufacturing base than any other chipmaker, giving the company an inherent advantage when it came to lowering costs, accelerating speeds or developing multiple products simultaneously. A four-processor Itanium 2 server with 8GB of memory would cost around $41,000, less than competing Sun servers. In contrast, a Sun Fire 3800 with four 900MHz UltraSparc III chips with 4GB of memory sold for $133,000⁹ . Lower prices, combined with improved performance, would make Itanium 2 more attractive than its predecessor. But Sun believed that its processors were way ahead of Itanium 2. It dubbed the Itanium chips, "Itanic", an analogy to Titanic, the famous shipwreck. Sun believed that there is too much engineering that it would have to do to make Solaris and other Sun products run well on Itanium 2 chips. A Sun spokesman said¹⁰ : "The migration costs are going to be very big, there is very little software available and it's an unproven architecture. This is the second time out with a demonstration vehicle."

Conclusion

Intel has put tremendous amounts of energy and money behind Itanium. The IA-64 fund (A fund started by Intel) has invested approximately $250 mn in start-ups to assist them on developing Itanium-based applications and worked extensively with established hardware and software manufacturers to get them to make Itanium-based projects. Consulting and testing labs have been set up around the world so large corporate buyers could tune their applications for the new chip. Intel is also in a position to build complete servers for manufacturers who could not build it themselves due to lack of resources. This option is expected to be popular with manufacturers in developing nations, such as Russia and India. The company has also straightened out many of the problems that held back Itanium 2. The photos of the core of the original Itanium looked like a "collage" of chip components rather than a tightly integrated processor, while its successor is trying hard not to be like its predecessor. Thousands of Intel employees were writing software and developing chipsets and designing entire systems around Itanium 2 to enable assemblers like Dell to easily package and sell complete servers. And at 17 centers across the US, Intel is working with corporate customers to help them get the best performance out of Itanium systems. At the time of the Itanium 2 release in early 2003, Barrett is confident about the prospects for his product. He expressed the same optimism while launching the program for Itanium 2's development in early 2002, when he said¹¹ :

"Technology doesn't stop during recessionary periods".

It would take a while before Itanium 2 is judged a failure or a success. Would Itanium 2 also share the same fate as Itanium 1 or would the tech world embrace this new processor? How would Itanium 2 take on the challenge of its cheaper rival, Opteron?

9] Source: Sun Microsystems, Corporate Website.
10] Source: www.news.com July 8, 2002.
11] Intel Developer Conference, California, April 25, 2002.