Business Tech

Unisys may have written Itanium's epitaph on Wednesday--at least for some of the largest server vendors.

Colin Lacey, vice president of Systems and Storage at Unisys, discussed in a phone interview why Unisys--one of the top 10 U.S. server vendors--doesn't see a future for Itanium, including the long-delayed quad-core Itanium "Tukwila" processor.

Lacey said Itanium's appeal has almost vanished for many vendors in server industry. "It's appeal has certainly narrowed down. It's almost exclusively down to a single vendor," he said, referring to Hewlett-Packard. "The current shipping platform is overdue for a technology refresh (and) it's been delayed a couple of times already," he said. In short, Itanium's chronic delays and underwhelming performance mean it's not a viable option anymore for Unisys--which offered Itanium-based servers in the past.

Lacey went on to say that Xeon can be "harnessed" in a high-end server environment to deliver performance that surpasses Itanium with the same reliability. Unisys announced on Wednesday that its newest enterprise server--the ES7000 Model 7600R--has set a record for price/performance in the Transaction Processing Performance Council's (TPC) TPC-H benchmark test. "The performance of the Unisys server, which uses the latest Intel Xeon 6-core processors, shows the increasing superiority of Xeon-based systems for mission-critical applications such as business intelligence over those based on Intel Itanium processors." the Blue Bell, Penn.-based company said in a statement.

Unisys' comments uncannily echo a statement made more than 10 years ago (in 1998) by an analyst who was discussing the long-delayed "Merced" chip--the processor jointly developed by HP and Intel that eventually became Itanium. At that time, an analyst said, "if the performance is similar to Merced," server vendors will opt to "squeeze more profit out of Xeon" instead of adopting Itanium.

Lacey spelled out how Unisys did its testing. "It's not like we're loading the dice. I know that Itanium has only two processors, but the configurations we're comparing have exactly the same number of processor cores. We're comparing 64-core to 64-core. There is no compute engine deficit between one and the other. So, it's looking at the architecture and what works."

With latest generation of Xeon technology "we can deliver pretty compelling raw performance as well as a very significant cost reduction by migrating over to a Xeon architecture. We're talking about a Windows SQL database environment and there's no real pain, if you will, from doing that on Itanium to doing that on Xeon," he said.

At Unisys, there is no significant difference in reliability either, one of Itanium's purported marquee features. "We track the unplanned downtime of our customer base and we track pretty much identical results between Xeon and Itanium architectures with respect to downtime. We don't see any material difference whatsoever and we keep very detailed tracking on that," he said.

Intel, on the other hand, believes both processors offer distinct advantages. "Both platforms offer unique advantages for different needs and applications," Intel spokesman Patrick Ward said Wednesday. "It's great that Unisys is being so aggressive with Xeon's price/performance strengths. Itanium offers terrific scalability and reliability strengths that are a better fit for some of the most mission critical workloads," he added.

Jointly, HP and Intel, not surprisingly, have a different take on Itanium's value for the large enterprise customer. In this video, Intel CEO Paul Otellini and HP CEO Mark Hurd discuss the technology. "Itanium is our architecture for enterprise-class machines. And that's a big segment of the market. About $28 billion. This is a very, very critical architecture for us," Otellini said in the video. "There are things that we're putting into the architecture, the RAS (Reliability, Availability and Serviceability) features, the reliability characteristics, the power-performance characteristics. These are things that we're tuning for the enterprise at the highest end," he said.

"The alliance around Itanium is also unique," Otellini continued. "Multiple operating system environments; 13,000 applications. It's outgrown every other mainframe architecture on the planet over the last five years," he said. "Itanium is about 10 years old now. It's really hitting its stride. It's at the point where we outsell other architectures in Asia. (Sun Microsystems) SPARC and (IBM) Power-based machines," Otellini said. "There are over a thousand silicon engineers at Intel working on this product line," he added.

More details on the Unisys test results can be found in the Unisys February 18 news release.

Correction, 12:45 p.m. PST: This story initially misstated the time period during which Unisys had over $1.3 billion in revenue. It was last quarter. Story also has been updated to clarify that the federal government has a proposed IT budget of more than $70 billion for 2009.

Lots of people lose money during recessions, so most tech vendors hunker down. They cut staff, trim budgets, and hoard cash to weather the storm. Some vendors buck this trend and look for risky opportunities that could lead to rich rewards. For those companies that remain on the offensive, buying venerable Unisys may be a fantastic bargain.

Yeah, I know. Unisys lost $14 million in fiscal year 2008 and recently swapped CEOs to straighten out this messy situation. Unisys is also a slow-moving monolithic firm with a corporate culture driven by lawyers. Think of an IT company comparison to AMC hit show Mad Men and you have a pretty good illustration of Unisys.

OK, so there is a good deal of risk here, but there is certainly some upside as well. Unisys has a global services organization capable of engaging in big enterprise projects. Last quarter, the company did over $1.3 billion in revenue, and it's especially well-positioned for large projects with the U.S. federal government, which has a proposed 2009 IT budget in excess of $70 billion. With its current share price, Unisys has a market cap of around $525 million. At the same time, the company has around $470 million in cash. The numbers seem attractive to me.

So how would a would-be suitor right the Unisys ship? Kill hardware right away. Yes, there is value there but not to a pure-play services firm. Second, cut selling and general administration costs by up to 10 percent (roughly $25 million in costs a quarter). These moves, along with consolidation of HR, IT, finance, and even legal, could pave the way to profitability. It won't be easy, but it could happen over two to three years.

Who should buy Unisys? EMC for one. It's a real systems player without a large services arm. Dell may be a cultural mismatch but the enterprise value-add would also be substantial. Others like Cisco Systems, CA, and Symantec also come to mind.

I know it is easy for me to write this stuff, but hey, that's the nature of my job. If I were in an operational role at a big company, however, I'd give this one serious consideration.

Unisys on Tuesday announced that it has named J. Edward Coleman as its new chief executive.

J. Edward Coleman

(Credit: Gateway)

Coleman will take on the roles of chairman and CEO. He replaces Joseph McGrath, who served as CEO for the past three years, and whose departure was announced last month. Henry Duques will step down from his position as chairman of the company's board but will become lead director instead.

In a statement, Unisys touted Coleman as a master of corporate transformations and turnarounds. Most recently, he served as CEO of Gateway for a little more than a year. In that short amount of time, he managed to work out a deal with Acer to buy the troubled PC maker. He has more than 30 years' experience in the IT industry and has held executive positions at CompuCom and Arrow Electronics.

"(Coleman) has a strong track record of helping IT companies successfully narrow their business focus and build on core strengths to drive revenue and earnings growth," Unisys' statement said. "Throughout his career, he has shown himself able to drive change from vision to execution, with a proven focus on operational improvement."

He'll have his work cut out for him. For most of the year, Unisys' stock has stayed below the $5 mark, and the company has faced declining revenues.

IT services provider Unisys announced Tuesday it has begun a search for a new CEO, as the company struggles to right its operations.

Joseph McGrath, who has served as the CEO for the past three years, will step down by year's end. He will, however, continue to oversee the company's daily operations until a successor is found.

"On behalf of the board, I would like to thank Joe for his nine years of loyal service to the company. We wish him well in his future endeavors," Henry Duques, Unisys' chairman, said in a statement.

Unisys was up 2 percent in early morning trading to $3.22 a share, following the news.

Throughout most of the year, Unisys' stock has languished below $5 a share, as the company has struggled to overcome declining revenue.

Unisys posted a 3 percent revenue decline in both its first and second quarters and finished last year with an overall revenue drop of 2 percent.

A pullback by customers in the financial services industry, a drop in IT spending, and delayed government orders have contributed to the company's woes, according to its quarterly reports.

As Intel officially unveiled its six-core "Dunnington" Xeon 7400 processor Monday, Unisys rolled out servers boasting up to 96 cores--with a catch.

As expected, Intel launched the Dunnington chip for high-end servers, the company's first six-core processor and last of its Penryn-class chips. Penryn will be followed by the Nehalem microarchitecture, due to appear initially as the Core i7 processor in the fourth quarter.

The Xeon 7400 boasts significantly better performance due to its 16MB cache memory and half-dozen cores.

Intel Xeon 7400 is first 6-core processor

(Credit: Brooke Crothers)

The Xeon 7400 is also one of the first Intel chips to have a monolithic design. In other words, all six cores will be on one piece of silicon. To date, for any processor having more than two cores, Intel has put two separate pieces of silicon--referred to as die--inside one chip package.

Unisys is in the vanguard of server vendors offering systems using the 7400 series processor. On Monday, the Blue Bell, Pa.-based computer vendor announced the ES7000 Model 7600R Enterprise Server, a 16- socket server providing up to 96 processor cores.

In addition to being better at handling complex database applications, one of the most compelling features of six-core servers is consolidation: collapsing many servers into a few servers. Unisys said it has demonstrated consolidation of 64 SQL Server databases into a single four-socket, Xeon 7400 processor configuration, with 24 total processor cores. In essence, this collapses a conventional "commodity server farm" of 64 single-socket, dual-core Xeon processor servers into a single server configuration, Unisys said.

There's an odd catch, however, that will affect the highest of high-end configurations. "Because Microsoft Windows operating system support is limited to a 64-core environment, within a single OS instance, we'll support up to 64 cores," said Colin Lacey, a Unisys marketing vice president.

"You'd actually have 96 cores physically within the system. But then you would disable two cores in each socket. So you'd actually be running these sockets at four active cores each (out of six)," Lacey said.

Lacey said this condition is necessary to deliver the highest performance in a Xeon 7400-based server running Windows, though he expects to rectify the 64-processor limitation in the future. He added that he wouldn't consider 64 cores to be a limitation in the "real world" for most customers, who would in most cases opt for servers with a smaller number of cores.

Linux does not have this limitation, Lacey said.

Advanced Micro Devices pre-emptively chimed in on the Xeon 7400 series last week. "Intel has taken the old front-side bus architecture and added 6 cores to it," according to an AMD statement. The company's Opteron processors have jettisoned the front-side bus--a data path between the processor and the memory controller--in favor of putting the memory controller on the same piece of silicon as the processor to speed performance. Intel has done this with its upcoming Nehalem architecture too.

Prices for the ES7000 Model 7600R range from $26,430 to $135,000.

Software vendors are also supporting the Xeon 7400 based platforms, including Citrix, IBM, Microsoft, Oracle, Red Hat, SAP, and VMware, Intel said.

Pricing for the Xeon 7000 Sequence processor in quantities of 1,000 ranges from $856 to $2,729.

Other server vendors announcing servers include Sun Microsystems, Hewlett-Packard, and Dell.