Intel said it remains committed to Itanium despite the fact that it launched a new version of its Xeon chip that in many ways rivals its older, high-end processor.

"Instead of Itanium at the top and Xeon at the bottom of the lineup, we're going to have them side by side," said Kirk Skaugen, VP and general manager for Intel's Data Center group, at a press conference earlier this week in San Francisco.

Intel used the stage to formally launch the Xeon E7. The chip offers a 40% performance improvement over its predecessor, according to Intel, and is designed from the ground up to meet user's data center needs in key areas like energy efficiency and support for virtualization.

As such, pundits are speculating whether the Xeon E7 will replace the Itanium as Intel's go-to processor for mission critical platforms. Itanium has only a niche presence that's mostly limited to Hewlett-Packard's Integrity and Superdome Unix servers, whereas the Xeon architecture already has a broad footprint across multiple computing environments, including Windows and Linux, in addition to Unix.

Speculation about Itanium's future ramped up last month upon Oracle's summary declaration that it would no longer develop versions of its database and ERP software that can run on the chip. Oracle claimed to have insider knowledge that Intel has decided to ditch the Itanium. Skeptics said the announcement was merely a ploy to convince HP customers to move their Oracle software environments to Oracle's Sun hardware, which is seeing declining sales.

Skaugen said that, while the new Xeon does rival Itanium in some ways, future versions of Itanium will surpass the E7. "Itanium is on a two-year beat rate," said Skaugen. "Since Itanium is not on a tick-tock schedule, Xeon and Itanium will leap-frog each other." The current version of Itanium is known as Tukwila. The next version is the 32-nm, 8-core Poulson chip, which promises to more than double Tukwila's performance, according to Intel.

Despite Skaugen's assurance about Itanium's future, his comments about the E7's capabilities begged the question of why Intel would continue to bear the expense of maintaining two separate architectures for mission critical applications. "With server vendors including Windows, Linux, and Solaris now running on the Xeon architecture, there's no workload in the world today that Xeon can't handle," Skaugen said.

Intel shares were flat, at $20.02, in afternoon trading Friday.