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IDC rains on Itanium parade

The research firm lowers its Itanium forecasts--dour news for the processor, which many once assumed would sweep the server world the same way Intel's Pentium has swept the desktop market.

IDC, an influential market research firm, has lowered its projections for sales of servers that use Intel's Itanium processor because of competition with chips from Advanced Micro Devices and others.

IDC expects Itanium server shipments to reach $7.5 billion in 2007, a drop from its previous forecast of $8.7 billion, the firm said Tuesday, but for the short term, it actually raised projections.

The newest lowering of projections is dour news for the processor, which many once assumed would sweep the server world the same way Intel's "x86" processors have swept the desktop computer market. Over the years, IDC has lowered its Itanium forecasts several times. In 2000, it expected 2004 Itanium server sales to reach $28 billion.

The reason for the changed forecast: "As the Itanium architecture becomes established, it will be challenged by what we consider more incumbent architectures that are here today and (by AMD's) emerging x86-64," Vernon Turner, vice president of IDC server group research, said in a conference call Tuesday.

The x86-64 chip technology, now called AMD64, is the method by which Intel rival AMD is adding 64-bit features to processor designs. AMD64 adds 64-bit features, such as the ability to address large memory, while still being able to easily run software written for x86 processors such as Intel's Xeon and Pentium or AMD's Athlon. Itanium, by contrast, runs that software only slowly and awkwardly.

Intel has a rosier view of Itanium. "We're pleased, overall, with the progress Itanium is making," Intel spokesman Scott McLaughlin said. "We shipped over 100,000 units in 2003. We are making strong progression against RISC" (reduced instruction set of computing) processors, such as IBM's Power and Sun Microsystems' UltraSparc.

IDC lowered its forecasts, but it hasn't relegated Itanium to a mere niche. An $8 billion market is twice the size of IBM's mainframe market, Turner said.

Itanium, a design begun at Hewlett-Packard and called Explicitly Parallel Instruction Computing, had been expected in 1999 but was delayed several times. HP only late in 2003 began offering a full server line using the processor.

Despite its troubles, Intel has succeeded in winning a place for Itanium in several servers. HP is the loudest of the chip's backers, but others selling it include Silicon Graphics Inc., Unisys, Dell, IBM, NEC, Hitachi and Fujitsu.

Itanium servers will chiefly be higher-end systems with four or eight processors, not dual-processor machines that ship in larger quantities, IDC also forecast.

IDC's projections typically predict spending behavior five years in the future. The research firm's 2000 forecast pegged Itanium server sales at $28 billion by 2004. In 2001, IDC predicted sales of $15 billion by 2005 and lowered its forecast later that year to about $12.5 billion.

Things got worse in 2002, when the 2006 projections dropped to $9 billion and later in the year were lowered to about $7.5 billion.

IBM is one of Itanium's biggest naysayers. Although it ships servers using the processor, it also touts its own 64-bit Power processor family and the pSeries and iSeries server lines that use it.

"The case for Itanium weakens daily," Karl Freund, IBM's vice president of management and strategy for pSeries, said in an October presentation.