News

Analysts: Dell’s Departure Won’t Spoil Itanium’s Party

• By Stuart J. Johnston
• September 21, 2005

Indeed, Dell’s departure from the Itanium community is unlikely to do any serious damage to Itanium’s perceived momentum – or perceived lack of it. While the PC company sells servers, Dell is not known as a vendor of large-scale servers. Dell’s sales account for only about 5 percent of current Itanium sales, according to Intel.

The Itanium Architecture 64-bit (IA-64) CPUs, Intel’s first true 64-bit processors – meaning that the chip’s handles both memory and instructions as 64-bit words -- had a rough start. Unfortunately, Itanium was very late coming to market and the performance of early versions didn’t live up to their prerelease press clips. In the meantime, Intel’s own Xeon CPUs have become somewhat competition on the lower end of the target market for the Itanium – now dubbed Itanium 2 – due to their support of multicore processing and 64-bit memory addressing.

In fact, Itanium, and the markets it participates in, are still evolving. For instance, a year ago, Hewlett-Packard bailed on a line of workstations built around Itanium. And last December, HP turned all further development of IA-64 – which is based on technologies from both Intel and HP – over to Intel.

But, IA-64 has won a begrudging place in enterprise data centers. HP remains the largest vendor of IA-64 systems, and the company announced in January that it had sold over $1 billion worth of IA-64 systems.

HP is also one of three companies who dominate the market for what Gartner analyst Martin Reynolds calls “Big RISC” machines. One of the others – IBM -- also sells some Itanium-based servers but its large-scale product lines are based on its proprietary Power architecture. The other firm, Sun Microsystems, offers enterprise servers built on its proprietary UltraSparc CPUs, although it does have a lower-end line of servers based on x86 processors from AMD.

When Reynolds says “Big RISC,” he might just as well be intending a double entendre or a bad pun, because servers in that market typically handle processes and data that are critical to customers’ businesses – so-called “business critical” applications like accounting, ERP and large-scale database processing. It would be a “big risk” to put them on any less capable, less reliable or less scalable machines, he says.

That’s a high-margin market for high-cost computing machinery designed to handle mainframe-quality workloads, and as such it’s a low-volume market. “Dell wasn’t in the high-end business,” says Rob Enderle, principal analyst at research firm The Enderle Group. So dropping IA-64 from its inventory will not impact the Itanium marketplace and is not likely to negatively impact Dell either.

“It’s unfortunate to lose [Dell] . . . but Itanium is targeted at the high-end while Dell is focused on the volume market,” says an Intel spokeswoman.

“There will continue to be a high-end business but it won’t be a high-volume business,” says Enderle.

Like Dell, Microsoft’s volume focus also limits the software giant’s interest in IA-64, the Intel spokeswoman continues.

Earlier this month, Microsoft announced that “Longhorn” server, due in 2007, will only support the IA-64 platform for three specific roles: database workloads, line-of-business applications and custom applications.

Meanwhile some of those enterprise workloads will likely eventually move down to less expensive clustered systems based on Intel Xeon processors and competitors from AMD as those technologies evolve.

“We do not see Xeon competing with Itanium though there is some crossover,” says the Intel spokeswoman. “They’re really designed for different market segments.”

Gartner’s Reynolds agrees. “Itanium is still more scalable with 128 registers compared to 12 [in Xeon],” he adds. IA-64 CPU dies are also physically smaller than Xeon dies, meaning that more cores should be able to be manufactured in the same amount of space, making Itanium more scalable than Xeon, he adds.

Meanwhile, the market that Intel is currently targeting with Itanium may not be growing quickly but it’s far from moribund. Reynolds estimates that the “Big RISC” market is as large as $25 billion annually.