Newsmaker: Turning a corner with the new Itanium

The move to Itanium has meant a rocky road for Hewlett-Packard's high-end server group. But the man leading the company's transition to the Intel chip believes the worst potholes are in the rear-view mirror.

The Itanium-based Integrity server line is fully fledged, the software is in place, and the new "Montecito" model doubles performance over the last Itanium. Now HP's Itanium server revenue is growing, as customers move away from machines using HP's older PA-RISC and Alpha chips, said Rich Marcello, general manager of the company's Business Critical Server group.

"We're at 38 percent of revenue through this last quarter," he said. "We'll be at 70 percent next year, in fiscal 2007. That's our plan."

That transition has been slower than expected at HP, which conceived of the chip family but relied on Intel to bring it to design and manufacture. Delays, poor initial performance and software incompatibilities hampered Itanium's debut. In addition, Intel delayed the arrival of Montecito from 2005 to the second half of 2006. Montecito, the first dual-core Itanium, promises to roughly double server performance.

"I think things are progressing, but HP has been consistently more optimistic than has turned out to be justified," said Illuminata analyst Gordon Haff.

Marcello makes no apologies for what he's done over the three years he's led HP's Itanium work. He prefers to direct attention toward Itanium's advantages over competing RISC (reduced instruction set computing) chips such as IBM's Power and Sun Microsystems's Sparc. For example, several server companies use it, Intel's manufacturing clout backs it up, and it can run multiple operating systems, including Windows, Linux, and HP's OpenVMS and HP-UX.

Marcello sat down with CNET News.com's Stephen Shankland to talk about Itanium servers and the road ahead.

Q: You have new Integrity products coming out with Intel's Montecito Itanium chip.
Marcello: We are completely refreshing the line, all the way up to our Superdome servers. We're also adding two new servers, the 3600 and 6600, which are midrange servers. We've been waiting to get Montecito now for a while, so there's a lot of pent-up demand.

How aggressive are you with pricing?
Marcello: We're not going to be raising the prices. The pricing will be very aggressive versus our competitors, IBM and Sun. When our customers see not only what we're offering in terms of initial system sales but also in terms of the three-year total cost of ownership, I think they'll be pretty pleased.

What lowers customers' effective cost over three years, compared with the initial acquisition cost?
Marcello: Our Montecito servers get twice the power efficiency. Whether they're implementing blades or Integrity servers or ProLiant, we optimize the power across the board. And with virtualization software, we believe that if they're consolidating down from many, many servers, they're going to actually get some cost-of-ownership benefits there as well.

HP IT (department) is going from mega datacenters down to six. We're buying thousands and thousands of Integrity servers.

One (way HP is using them) is a shared application server, where they're going to stack applications on top of our HP Integrity servers. If you're a guy who owns a server and an application, you want to make sure you maintain control over that. It's kind of like when you're a kid: You don't want to share with your brother or your sister. But (when using partitioning and virtualization technology) you can guarantee with Workload Manager or Global Workload Manager that you're going to give that user the same level of resources. You get all the benefits of consolidation, but you also get the benefits of the user feeling like it's his or hers.

This is the phenomenon of server hugging, where nobody wants to lose control over his or her department's hardware. But it still requires centralized IT purchasing and managing severs, so do departments still worry about losing control?
Marcello: That's right. But the benefit is that you save a bunch of money, and for the most part--at the 95 or 98 percent level, you're getting the same level of server control as you would have gotten if you owned the server yourself.

When HP reported earnings for the most recent quarter, Business Critical Systems's revenue decreased 6 percent overall. Although Itanium Integrity grew 76 percent, it was more than offset by Alpha and PA-RISC server declines. Would that have happened if Montecito had been on time?
Marcello: I don't know. It's a hypothetical. I do think that there's a lot of pent-up demand for Montecito, and so my overall view is that it is highly likely that customers are waiting for it, and so that could be true.

What was the effect of that Montecito delay on you?
Marcello: I think we would have preferred to have it earlier. I think that we mitigated a lot of it by introducing our (high-end) Arches-based systems back in the springtime.

Some have suggested Intel will drop Itanium as soon as the contractual obligations with HP expire.
That's hogwash. We are working very closely with them, and we have an agreement in place with for a long time. The alliance agreement we have with them goes through 2011.

And after 2011?
We renegotiate. We extend the agreement. There's nothing magical about 2011. You do these things five years at a time, basically.

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[SeizeCTRL]

:(

I miss the old DEC Alpha and OpenVMS! Would have been nice if Compaq would have invested time in that when they bought DEC and I would think that HP would have done something with Alpha in their acquisition of Compaq. Oh well!

[fred dunn]

Itanium is already a legacy product....

This product is already in legacy phase. You can try and push this just like you did with the P4 but it's going to hit a wall soon and you're going to be right back where you started.
Just think of the maintenance costs for those shops that installed the first Itanium servers. The contract costs even from HP are going to skyrocket because of the lack of those older stepping CPUs.
When you buy a server TCO is a major factor and Itanium just doesn't make the cut.

[fred dunn]

Turn 4 corners and back at the beginning...

No one wants it.