Intel cuts Itanium fat with new chips, tech

The 1.4GHz Itanium 2 with 3MB of cache is designed for servers in clusters. The new chip will provide about 25 percent more performance and cost much less than the initial Itanium optimized for clusters, which came out last year, said Jason Waxman, director of multiprocessor platform marketing at Intel.

The second new chip, a 1.6GHz Itanium 2 with 3MB of cache, is optimized for higher performance in general-use two-processor servers, he said.

Waxman reiterated that Intel is working on several technologies that will eliminate any price premium on Itanium by 2007 and thereby allow its performance advantages to, hopefully, blossom.

"The price/performance balance will be heavily in favor of Itanium," Waxman said.

With the focus on price, the Itanium melodrama is once again reaching a turning point. After several years of delays, the chip family debuted in 2001 to poor reviews and negligible customer acceptance. A second version of the chip that appeared in 2002 dramatically improved performance but failed to spark the market.

Itanium finally began to gain acceptance in 2003 with Madison, a new version of Itanium 2 that substantially improved performance again and lowered the cost. Intel shipped about 100,000 Itaniums in 2003, compared with only around a few thousand for the first two years. Itanium volume is expected to double this year, CEO Craig Barrett said in February.

But in 2004, Intel announced that it would come out with a version of its Xeon chip that runs both 32- and 64-bit code. Xeon and Pentium chips typically run 32-bit code. Itanium runs 64-bit code, which, among other advantages, lets a computer maker pack far more memory into a computer.

Itanium, however, requires completely different software to work well, a factor that has hindered adoption. Part of the appeal of the Opteron chip is that it can handle larger memory loads in 64-bit mode on essentially the same software base.

Lowering the cost of Itanium servers won't eliminate the software issue, but it will begin to create an environment in which greater acceptance could occur, which in turn could cause software developers to gravitate to Itanium. Analysts and PC makers have viewed this theory with various doses of skepticism, but the range of opinion is generally substantially less negative than it was 18 months ago.

Price drops have already had some effect. In 2002, a two-processor Itanium server cost about $18,000. With the new chips, a similarly configured system can sell for less than $8,000, while basic one-processor Itanium servers will go for just more than $2,000.

Some of these price cuts have come as a result of Moore's Law, which predicts that the number of transistors on a chip will double every 18 months. But Intel has also expanded its product line to better suit the economic realities of two-processor servers. The company also designs and partly manufacturers many of the Itanium servers on the market, which cuts independent engineering costs.

To lower the price further, Intel will begin to create products and add features to Itanium so that Itanium servers can be made out of many of the same components as Xeon servers. In 2005 and 2006, Itanium servers will be able to use the same memory or other components of Xeon servers, Waxman said.

In 2005, Intel will also come out with two different chipsets for Montecito, the next major version of the chip. One chipset will wring maximum performance out of the chip, Waxman said, while the other will allow server makers to insert Montecito into their Madison-based servers, thereby cutting down independent design efforts.

By 2007, Intel will release a common chipset that can work with either Itanium or Xeon servers, similar to what IBM did with its Summit chipset.

The 1.4GHz Itanium 2 comes out Monday for $1,172 in 1,000-unit quantities. A 1.6GHz version comes out in May for $2,408 in similar quantities.