With its chips inside about 83% of all x86 servers, PCs, and notebook computers, Intel shares some of the blame for how much time and money businesses spend just keeping their IT systems running. With last week's introduction of a chip architecture that promises lower electric bills and easier computer management, Intel took up that challenge, pledging to help companies wring out some of those IT costs.

That could free up companies' IT budgets for what their boards really care about: deploying new systems that can cut bureaucracy, help spot sales opportunities, or get products to market quicker. Most businesses spend 70% to 90% of their IT dollars simply keeping systems running. "It's harder and harder for CIOs to be able to afford to put new capabilities into their enterprises," Intel president and chief executive Paul Otellini said at the Intel Developer Forum last week.

If Intel's new architecture strategy delivers cost savings, it may also help polish the company's reputation for technical innovation, which has been overshadowed a bit lately by rival Advanced Micro Devices Inc.

Otellini is promising cost savings from embedding into Intel's chips features to improve the security and manageability of IT systems. Intel says new dual-core processors due next year with built-in management and virtualization features will cut the cost of managing a data center or a building full of PCs. They also will provide more performance per watt, letting companies cut energy and cooling costs.

Intel plans to deliver processors with two or more cores that can each operate at slightly slower speeds but provide more performance than a faster, single-core chip. That lets them consume less power and generate less heat, yet provides a path for continued performance improvements. Much like how Intel sold its Centrino chip as a platform for wireless computing, it will pitch these multicore chips, combined with other Intel chips, as platforms for specific types of computing systems, including a business PC platform.

The "next-generation processor architecture" Otellini discussed last week--designed to reduce heat--will be used across all future processor lines, including those for servers, PCs, notebooks, and an emerging category of ultra-low-power systems Intel calls "handtop" computers. The first chips based on the new architecture will be dual-core and introduced in the second half of 2006. Servers based on them will provide up to 3.5 times performance-per-watt improvement over today's single-core Xeon-based servers, Intel says.

Intel is promising major advances from virtualization and management capabilities embedded into the chips. Virtualization, which will be added to Intel's processors next year, lets computers run multiple operating systems and applications in virtual partitions. By building virtualization hooks into its processors, Intel--as well as AMD with its Pacifica technology--gives third-party developers direct access to the primary operational layer of the processor. That makes it easier to create and move virtual computers from one physical server to another, boosting server usage rates so companies need fewer machines. It also helps to keep systems running when an application on a virtual computer fails.

Active-management technology, slated for early 2006, will be added to Intel's processors through the use of a microcontroller-like chip that will be added to the networking chipset in its new processor platforms. The controller is meant to simplify the ability to deploy and monitor systems built around the new platforms, letting IT managers remotely analyze and fix systems by providing information and the ability to diagnose, debug, update, and control a system even if power or the operating system is turned off.

A major goal is to reduce the number of "desk visits" to fix a machine--each set of which can cost as much as $180, says Steve Ward, chief executive of computer maker Lenovo, a unit of Lenovo Group Ltd. Ward last week showed a prototype of ThinkVantage management technology that combines Lenovo's Antidote Delivery Manager software with Intel's active-management and virtualization technologies to automate maintenance tasks and use virtual partitions to protect systems from viruses.

AMD--which last week pitched camp at a hotel within walking distance of Intel's Developer Forum--promises to meet Intel in a head-to-head battle of multicore chips. AMD has gained server market share in the last year with its Opteron chip by introducing technologies such as dual-core processors and 64-bit capabilities to the x86 market before Intel. "Lowering IT costs has been a focus since our introduction of Opteron," says Brent Kerby, product marketing manager for Opteron. "We don't need to bring out a new architecture to accomplish that because our AMD64 architecture has been the basis for all of our innovations, and there is still a lot of headroom left for advancement."

Yet Intel's new architecture and embedded IT advances may push the company ahead of AMD in terms of technical innovation, now that the company is no longer putting so much focus on the gigahertz speed of chips. "Intel woke up from its frequency delusion and is now going full-bore on dual-core," says Gordon Haff, an analyst with Illuminata.

Intel must overcome other problems if it's going to become more than a provider of processors. Centrino proved the platform concept can work. Combining chips for wireless communications with its computing processors and getting them in just about every new notebook helped create today's Wi-Fi boom, which created demand for more notebooks and Intel chips.

But if Intel does the same thing in markets such as home entertainment and starts using more of its own chips for tasks such as graphics, third-party chipmakers may offer their technology advances and innovations to AMD. That could help the much smaller company stay ahead or at least keep pace with Intel and its much larger budget for research and development.

The goal may be to keep the chips cool. But the competition--as Intel and AMD ramp into high-production of dual-core processors next year and quad-core implementations in 2007--will be plenty hot.