Intel Investors - A good article on the ITanium and its prospects in corporate applications.
informationweek.com
May 28, 2001
ndly
Intel's 64-Bit Question
The chipmaker's Itanium processor could significantly lower the cost of powerful servers for businesses
By Paul McDougall (paulmcd@cmp.com)
im Richmann, VP and chief technology architect at the Nasdaq Stock Market Inc., wants top-notch performance at reasonable prices. Just take a look at his $25 watch, complete with rubber wristband. "Most of the people in my industry wear a gold Rolex," he says. "But you know what? This keeps better time." The price-savvy exec is now taking a close look at Intel's long-awaited 64-bit microprocessor.
This week, the company that dominates the market for chips that power desktop and notebook computers and departmental servers is attacking the high end with the formal launch of its first 64-bit processor. Intel executives say Itanium, now available in volume shipments, will help the company grab a bigger chunk of the $23 billion market for the big servers used to run company databases, transaction-processing programs, and other critical
E-business applications. International Data Corp. says Intel had 18.4% of that market in 1999, while RISC/Unix platforms controlled 57% and mainframes 23%.
With Itanium, Intel wants to fundamentally alter the cost of business computing. But there are challenges. Key applications and operating systems aren't ready; the chips present a potential product-line conflict for computer companies that also sell Unix systems; and many businesses have clamped down on technology spending.
Still, Intel officials are confident they can succeed by turning the company's vast, economy-of-scale-driven manufacturing base to the production of high-performance, low-cost 64-bit chips. "Look at the cost-effectiveness we've been able to bring to the desktop and to the 32-bit server market," CEO Craig Barrett says. "We're going to do the same thing in the 64-bit space." Intel is selling the chips for as little as $1,177 each in batches of 1,000--hundreds of dollars less than its most-expensive Pentium III Xeon chip.
The low price is already trickling down. Dell Computer officials say pricing on the company's four-way Itanium-based PowerEdge 7150, slated for broad availability later this year, will fall between $40,000 and $45,000 for a fully configured system. By comparison, IBM's pSeries 620 6F1 Unix server sells for $87,000 with two 64-bit 600-MHz RISC chips. And Sun Microsystems' low-end Enterprise 3500 server, with four 400-MHz UltraSparc modules, comes in at more than $90,000. "Itanium could ultimately drive down our costs by an order of magnitude," Richmann says.
Barrett says Itanium systems will let businesses give more knowledge workers affordable, local access to the horsepower they need to crunch numbers in customer-relationship management and E-business applications. "We're creating the possibility for more diversified, localized computing," he says.
That's what Wells Fargo & Co. in San Francisco plans. Staffers in its distribution strategies group run data queries on mainframe time borrowed from other departments. "We need a cost-effective way to do our own data mining," says Francois Christen, the company's VP for market-area analysis and CRM, who's evaluating Compaq Itanium servers.
Low-cost 64-bit servers could also help companies engage in E-business activities without busting the budget. Women's apparel manufacturer Liz Claiborne Inc. in New York uses an electronic data interchange system running on Hewlett-Packard Unix servers to log and process purchase orders from retailers. But the system is having trouble keeping up with sales that have increased for 21 consecutive quarters. "We can't process orders fast enough," says Joe Yankauskas, Liz Claiborne's manager of technical services. As a result, the company may add Itanium servers to the mix to create some breathing room--"if it lives up to expectations."
Itanium-based systems will account for 42% of worldwide server sales by 2005, according to Aberdeen Group predictions. But doubts remain. Itanium technology is largely unproven in the field. "A lot of customers already associate Itanium with delays and screwups," says Merrill Lynch analyst Joe Osha. Itanium-based workstations are expected by year's end from several computer vendors, but desktop machines with the new chips aren't expected anytime soon.
Switching to Itanium could ultimately drive down Nasdaq's processing costs tremendously, says VP and chief technology architect Richmann.
As the label implies, 64-bit chips can process information from software 64 bits at a time, giving them twice the raw data-handling capacity of 32-bit chips. Intel says design breakthroughs make Itanium faster than chips such as Sun's 64-bit UltraSparc III at a comparable clock speed. Itanium's EPIC (explicitly parallel instruction computing) architecture lets the chip process multiple instructions at once. RISC (reduced instruction set computing) chips, such as UltraSparc, lack EPIC's throughput capabilities.
Sun officials downplay the impact of EPIC. David Yen, VP and general manager of Sun's processor group, says many applications aren't designed to run in parallel and perform better when their instructions are processed sequentially. "Itanium's value for general-purpose applications will be highly questionable," he says.
To silence critics, Intel must prove that systems built with Itanium, which was developed with Hewlett-Packard, can handle the round-the-clock requirements of data centers. Until then, even backers will limit its use to midrange applications. Nasdaq's Richmann says Intel is years away from getting a crack at the Trumbull, Conn., company's data center, which can handle a peak load of more than 3 billion trades a day. PC-based servers, even when coupled with clustering technology, aren't sufficiently reliable for Nasdaq's purposes. "Even though these systems may meet the definition of fault tolerance, they don't meet the systems-management criteria to reliably put them on the trading floor," Richmann says. Nasdaq runs its trading systems on Tandem computers linked to a mainframe.
Richmann says he'll give Itanium serious consideration for other applications. Nasdaq uses Intel servers to power its subscription information services and Web site, Nasdaq.com. Price alone could give Itanium products an edge over midrange Unix systems, he says.
But early adopters may have trouble finding software that's tuned for Itanium. Microsoft hasn't yet released a complete beta version of its forthcoming 64-bit operating system; the software vendor says it will begin shipping its 64-bit Windows Advanced Server in a "limited edition" for Itanium by summer. The final release is slated to ship later this year. Intel is hedging its bets: The company has courted dozens of Linux developers to ensure broad support in the open-source community.
Enterprise applications are another concern. Bill Anderson, infrastructure strategist at Motorola Inc. in Austin, Texas, wants to test applications from SAP on Dell's new PowerEdge, but he doesn't know when the enterprise resource planning software vendor will ship the software. "We're getting fuzzy dates," he says. An SAP spokesman says the company's Itanium-specific applications may not be available until early next year.
Other software vendors are also vague. Most have said they will support the chip, but few will commit to release dates or pricing. J.D. Edwards & Co. says it plans to demonstrate Itanium software in June, but Oracle, PeopleSoft, and Siebel Systems won't reveal their plans. Pallab Chatterjee, executive VP for supply-chain management at i2 Technologies Inc., says he expects widespread adoption of Itanium systems by the company's customer base, but he won't specify a release date for software. (See related story online, "Software Vendors Have High Hopes For Itanium.")
It's possible that some software vendors may be deliberately holding off porting applications to Itanium because businesses will be able to consolidate applications on a smaller number of more powerful machines, which could translate into less total revenue from licensing fees. "I've had a senior VP of a major company look me in the eye and tell me that," says Will Swope, VP and general manager for Intel's Solutions Enabling Group. One solution may be for developers to charge more when their apps run on Itanium servers.
Another problem: Itanium systems are hitting the market just as many businesses are reining in IT spending. "We're in a serious cost-containment mode," Motorola's Anderson says. "In this environment, it becomes very difficult for me to justify buying unproven technology."
Lukewarm support from computer makers could also hurt. Some Intel partners sell high-margin Unix systems, and they aren't eager to cannibalize those sales with lower-margin Itanium-based computers. IBM this week will unveil a four-way Itanium system, but company officials are downplaying Itanium's suitability for the kind of heavy-duty applications Intel has in mind.
Still, nobody's discounting Intel's ability to transform a market. The real question is, how long will it take? As Anderson says, "Dollar for dollar, Intel always annihilates Unix on price. But turning the IT market is like turning a battleship."--With Martin J. Garvey, Steve Konicki, Jason Levitt, Jennifer Maselli, and Aaron Ricadela
Photo by Steve McAlister |
