Re: "and now IA-64. "
Cut it losses with IA64 ?
Have you been asleep for the past 3 weeks?
Look what Compaq just committed their entire corporate SERVER line to:
"Compaq to Use Itanium Processors Made by Intel in All of Its Servers"
Maybe you can post a comparable design win for some AMD processor - eh, smart one?
June 26, 2001
Compaq to Use Itanium Processors
Made by Intel in All of Its Servers
By Molly Williams
Staff Reporter of The Wall Street Journal
Continuing to cut costs and focus on systems and service rather than chips, Compaq Computer Corp. will use Intel Corp.'s Itanium processors in all its servers and phase out the Alpha chips it acquired as part of its $9 billion purchase of Digital Equipment three years ago.
The companies declined to give financial details of the deal, and Compaq wouldn't say if it expected to take any charges related to shutting down Alpha development. Hardware sales of Alpha-based servers and the Himalaya fault-tolerant machines were $3.2 billion last year. Compaq, which has been using Itanium in some server products, will make one more version of Alpha and will license the intellectual property to Intel.
Analysts said Compaq's decision was simply economic: that it would let Intel shoulder the financial burden of developing new chips, and Compaq would focus on software, services and systems. Richard Gardner, a computer analyst at Salomon Smith Barney, estimated Compaq spends 15% of its research-and-development budget designing the Alpha chips at the heart of its big computers. The savings once it shifts that work to Intel will be between $200 million and $300 million annually, he said.
"It's an admission that the economics of doing proprietary microprocessors are severely challenged," said Nathan Brookwood of Insight 64, a microprocessor-industry research firm in Saratoga, Calif. "Alpha was able to deliver industry-leading performance, but it never had unit volumes that were enough to make it economically justifiable."
Compaq said it talked with customers and is confident that sales won't suffer during the transition. Compaq will make one more version of Alpha, called EV7, and then will migrate to Itanium. The Himalaya computers, which are used in environments where 24-hour availability is important, will be transitioned from using MIPS Technologies Inc. processors to Itanium. Compaq said its machines will be entirely Itanium-based by 2004.
"We have a very clear roadmap," said Compaq Chief Executive Michael Cappellas. "There's nothing for a customer not to like." He added that using Itanium will boost confidence that may have been flagging among customers who were concerned that Compaq couldn't keep up with development of Alpha. "There was concern in the marketplace of whether over time we could keep a competitive edge," he said.
Terry Shannon, a board member of Encompass, Compaq's biggest customer group, said existing customers of Compaq's fail-safe computer line "are not going to be overly concerned with this," because they were already expecting a swap of the underlying chip to Compaq's own Alpha chip from the current MIPS RISC chips.
The move comes as Compaq is trying to emulate International Business Machines Corp.'s model of relying more on software, services and integrating complex computing systems rather than just selling hardware. Compaq also hopes to cut costs, which this agreement may help it do.
In 4 p.m. New York Stock Exchange composite trading Monday, shares of Compaq, based in Houston, rose 40 cents to $13.90. In 4 p.m. Nasdaq Stock Market trading, Intel shares rose $1.07 to $28.58.
For Intel, the Compaq agreement is an important win for Itanium, which is more powerful than the Pentium chips used for desktop computers. The deal includes a provision that Intel hire several hundred engineers from Compaq during the next few years.
"It gives Itanium a huge amount of credibility," said analyst Drew Peck of SG Cowen Securities. Intel has been developing Itanium for many years and officially launched the chip last month after several delays. Itanium, which can process data in 64-bit chunks rather than 32-bit chunks as desktop processors do, is more powerful and represents Intel's effort to get its products into the heart of the heavy-duty computers that run corporate networks. Intel's chips already run about 80% of the world's personal computers.
The agreement between Intel and Compaq isn't exclusive, and Compaq still could use microprocessors from other companies such as Advanced Micro Devices Inc. or Transmeta Corp. The companies said they don't expect any regulatory issues.
Intel in 1998 bought Digital's semiconductor business, which excluded Alpha, but included a plant and other chip technology, for $750 million. That deal was part of a settlement agreement of patent litigation between Intel and Digital.
Hewlett-Packard Co., which worked with Intel to design Itanium, also plans to phase out its own PA RISC chips in favor of Itanium. IBM and Sun Microsystems Inc. still make their own chips and software, though IBM also will use Itanium in some products.
-- Gary McWilliams contributed to this article.
Write to Molly Williams at molly.williams@wsj.com |
