The company hopes to ignite server chip sales with Deerfield, an energy-efficient Itanium 2 processor.
The chip is scheduled to debut in the third quarter at $744, according to Intel product plans seen by CNET News.com. That's substantially below the price of Intel's other Itanium 2 chips, which range from $1,338 to $4,226.
The price is only $107 above the company's fastest desktop and notebook chips, which sell for $637 and are manufactured in much larger volumes, making them cheaper to produce.
The Deerfield pricing seems deliberately calculated to attack one of the chronic problems associated with the Itanium line: slow sales. Since it came out in May 2001, the Itanium family has barely made a dent in the server market in terms of unit shipments. The Santa Clara, Calif.-based chipmaker, however, has steadily increased performance and has funded application development, which could begin to change the picture.
"Performance is not a reason not to adopt (Itanium) any longer, and price is not a reason not to adopt any longer," Illuminata analyst Gordon Haff said.
Although the servers are generally less sensitive to pricing pressures than PCs, cost is a factor in the kind of markets that Deerfield will address. Blade servers can contain hundreds of processors, which drives up costs. Workstations also have to compete with high-end desktops.
Currently, Intel serves the blade and workstation market with its Xeon DP line of processors, which range in price from $156 to $851. Intel also makes a line of Xeon MP processors, which are for servers needing four or more chips. Those chips start at $1,117.
While Xeons and Itaniums can be used in similar types of computers, they are quite different. Itaniums are 64-bit chips, which mean they can handle far more memory but need specialized software. Xeon chips can't juggle as much memory but run regular Windows and Linux code, a big selling point.
Last month, Mike Fister, general manager of Intel's Enterprise Platform Group, said that the company would try to expand the breadth of the Itanium line, starting with Deerfield. Though the final price might vary slightly, Deerfield will likely cost far less than other members of its clan.
And, while the chip won't exhibit the same performance as top-end Itanium 2 chips, Deerfield won't be a slouch, according to Fister. The chip will perform at the same level, generally, as McKinley, the first version of the Itanium 2, which was rated well by analysts.
Deerfield will run at 1GHz and contain a 1.5MB cache. Although 1GHz is slow for a desktop, regarding performance, the 64-bit ability and other architectural enhancements put Itanium chips ahead of Pentiums.
The chip will also consume less power, and therefore exude less heat, than McKinley, an important factor for dense blade servers. A McKinley running at 1GHz with a 1.5MB cache costs $2,247.
"Basically, Deerfield is being positioned very much against Xeons," Haff said. Still, a lack of applications or a "maybe you don't like Itanium for philosophical reasons" could keep a lid on sales, he speculated.
Intel also plans to come out with an Itanium 2 tweaked for clusters, chains of one- and two-processor servers that when linked together can act like supercomputers. The Itanium 2 for clusters will run at 1.4GHz, contain a 1.5MB cache and cost $1.172.
Meanwhile, the Xeon line marches on. The company plans to release a 3GHz Xeon with a 1MB cache for workstations and two-way servers. Currently, these Xeons contain caches of 512KB. A similar chip running at 3.2GHz will appear in the fourth quarter.
In the first half of next year, Intel will refresh the Xeon DP and MP lines of chips.
Michael Kanellos of CNET News.com reported from San Francisco. Kai Schmerer of ZDNet Germany reported from Munich. News.com's Stephen Shankland contributed to this report.