A $10B Dollar Bet on Itanium

UPDATED: A consortium of big hardware makers and Intel announced plans to spend a
collective $10 billion to help drive adoption of systems based on the
Itanium platform.

The Itanium Solutions Alliance said the funding, which is targeted for
use through 2010, would go to research and development, capital
expenditures, sales and marketing, and ISV-enabling activities.

Backers
ponying up money in support of Itanium include Bull, Fujitsu,
Fujitsu-Siemens Computers, Hitachi, HP, Intel, NEC, SGI and Unisys. The ISA
was announced in September as a marketing and support group for Itanium suppliers,
developers and customers.

ISA won’t say how much its eight lead member companies are contributing individually to the $10 billion kitty. “I can state every company has made a significant increase in their funding to ISA,” Joan Jacobs, director of Integrity partner development at HP, told internetnews.com.

Originally co-developed by Intel and HP in the 1990s, the 64-bit Itanium
processor didn’t meet expectations as a high-end successor to Intel’s
best-selling Pentium. Since Intel took over years ago as sole developer,
Itanium has been repositioned for high-end servers, high-performance
computers and supercomputers.

The big cash infusion comes at a time when many in the industry have
questioned Itanium’s future. Last fall, Intel had to announce a delay in the
release of Montecito, its first dual-core Itanium.

Instead of coming out in the first quarter of this year as
scheduled, Montecito is now slated for the middle of 2006. The release of
several successive versions of Itanium also has been pushed back.

At least one analyst affirmed the need for investment for Itanium to be a
long-term success.

“Itanium solution delivery to mission-critical environments represents a
new business model for enterprise and technical computing users bringing
choice of hardware platform, operating system, and applications to
environments which heretofore have been limited by proprietary vertical
solution stacks,” said Vernon Turner, group vice president and general
manager, IDC in a statement.

“A change this substantial takes collective
industry commitment and investment.”

The ISA claims the combined revenue for Itanium systems represents 55
percent of Sun’s Sparc revenue and 33 of the market for systems based on
IBM’s Power architecture.

Sun sent internetnews.com a statement disputing ISA’s claim:

“Based on the available facts we have, we don’t understand how this is possible. Itanium volumes are completely flat, showing that if revenues are increasing, it means that fewer, but larger and larger systems are being sold. (Itanium is being pushed up to the high en, as Opteron is replacing Itanium in the 2-way and 4-way space.) The bottom line is, revenue doesn’t matter as much as volume. Without volume, ISVs don’t get ROI on software developments. Without volume, chip pricing goes up, not down. Without volume, you are a niche player. Alpha was a strong chip, but without volume it died.”

HP’s Jacobs said the big bump in investment by the ISA consortium will help Itanium compete better against the likes of Power and Sparc. “We can jointly invest significant funds in things like tool sets and marketing. For companies like IBM and Sun, it’s like a single flag waving in the wind.”

Even as Intel and partners look to expand Itanium’s market, Intel is
beefing up its other 64-bit processor, Xeon, with a new processor addition
planned for 2007 code-named “Tigerton.”

Tigerton will be part of a new Xeon
MP platform called “Caneland,” which will have a dedicated high-speed
connection between the chipset and memory, improving on earlier and current
designs that use a separate front-side bus.

AMD regularly
mocks Intel for continuing to use the front-side bus , which dates back some 20 years.

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