Itanium on the Grow?

Itanium is regularly slammed by competitors and dissed by some analysts as a processor with no future, but market research firm IDC sees solid growth ahead.

Based on results of interviews with some 501 members of its Enterprise Server Customer Panel, IDC reports high customer satisfaction and solid intent-to-purchase ratings for Itanium-based systems.

Also, more than two thirds of HP PA-RISC server customers interviewed say they plan to migrate to Itanium systems.

Itanium is Intel’s processor for servers and mainframe-class high performance systems. It was originally co-developed with HP, but is now solely by Intel. Billions of dollars have gone into its development, which began more than 10 years ago.

First positioned as a mainstream replacement to Pentium, Itanium has been repositioned for complex applications such as transaction processing and advanced scientific applications. Critics fault its high cost and complexity (resulting in a slower upgrade cycle than more high volume processors).

HP scoffs at the critics and has the numbers to back up its bullish outlook. HP’s Integrity servers are the leading Itanium-based server platform; the company claimed to have have reaped more than $1.6 billion in sales of HP Integrity server solutions in fiscal year 2005.

According to IDC, the market for Itanium-based servers will grow to approximately $6.6 billion by 2009. Over the next five years, IDC expects the compound annual growth rate for Itanium-based servers to be 35 percent, compared to 3.4 percent for the overall server market.

Still, HP has a base of PA-RISC customers it’s been prepping for years to move to Itanium. A more salient question is how big the Itanium ecosystem is, and if there will be enough variety and competitive offerings from different vendors to keep it attractive to IT buyers.

Silicon Graphics, the maker of high-end visualization systems used by Hollywood movie studios, scientific researchers and others, moved to Itanium a few years ago. But the company has been losing money and recently admitted it may have to seek bankruptcy protection.

IBM was the No. 2 supplier of Itanium systems a few years ago but moved away in favor of high-end systems built on its own line of Power processors.

Intel has been unwavering in its public comments of support for the continued evolution and development of Itanium.

But Intel had to eat a bit of crow when it was forced to push back the release date of the first dual-core Itanium, the “Montecito” Itanium 2, from late 2005 to the middle of this year.

Itanium supporters are banding together via the Itanium Solutions Alliance (ISA). Organized in September of last year, the group’s aim is to boost Itanium’s profile, share marketing costs and to better support developers.

Last month, ISA made a blockbuster announcement that its members are committing $10 billion to promote and support Itanium over the next five years.

The ISA says there are 75 Itanium suppliers including Bull, Fujitsu, Fujitsu Siemens Computers, Hitachi, NEC, SGI and Unisys as well as Intel, HP and SGI.

Competitor AMD isn’t phased.

“Itanium remains a niche play at the high end of the market,” Randy Allen, AMD’s corporate VP of server and workstations told internetnews.com. “If you look at the return on investment in Itanium it’s a trail of tears. Pouring another ten billion dollars in makes the story that much sadder.”

But HP, for one, isn’t crying.

“Itanium has been the target of a lot of flaming arrows by our competitors, but real customers are really happy because there are things you can do with Itanium you can’t do with the other choices, and they’re looking to buy more,” said Brian Cox, director of server marketing for HP’s business critical servers.

“And software vendors are flocking to Itanium. There are now over 7,000 applications for Itanium which is up from a base of near zero a few years ago.”