Only two weeks ago at the Intel Developer Forum, HP pledged to offer servers based on Intel's 32-bit Xeon processor with 64-bit extensions. The HP Opteron systems, however, will beat the Xeon systems to market.
"The customer is basically in the catbird seat," says Jean Bozman, an analyst with research firm IDC. "IT spending is increasing, and [server] customers can talk to all these vendors and entertain various bids and proposals."
Townsend Analytics Ltd. is moving to 64-bit computing in order to improve overall system speed and increase available memory addressability. The provider of real-time trading and investment software runs a server farm of about 700 HP ProLiant servers and plans to add Opteron-based servers in the near future, says Jon Akeson, procurement evaluator for the company.
"It would be a major effort for us to validate and test all our software if we jumped directly to Itanium," he says. "We're not married to any particular brand of processor, but performance is very important, as well as the longevity of our investment."
Subhash Tantry, executive VP at CenterBeam Inc., a provider of remote IT outsourcing services that lists Intel among its investors, says he's also planning to add Opteron servers.
CenterBeam uses about 30 multiprocessor ProLiant servers, and will choose additional servers based on "scalability at the right price," Tantry says. "We've considered Itanium, and we'll look at that as a possibility, depending on how well [Opteron and 32/64-bit Xeon] compare."
IBM already has shipped thousands of Opteron-based servers, and Sun Microsystems' first Opteron servers will be available in April, which put pressure on HP to add Opteron systems, says John Enck, an analyst at research firm Gartner.
HP would have preferred that Intel had released its 64-bit Xeon extensions earlier, possibly eliminating the need for an Opteron offering, Enck says. But with Intel reluctant to release a 64-bit-capable Xeon for fear of what it might do to Itanium, HP had to pull the trigger or potentially lose business to its rivals.
In introducing the Opteron systems last week, Scott Stallard, senior VP and general manager of HP's enterprise storage and servers group, said, "This isn't AMD versus Intel. Competition forces ... everyone to step up and deliver better solutions. It's not a situation where we have had a falling out with Intel."
Competition in the server market is strong. IBM led in revenue worldwide last year, with $14.8 billion. HP was second, with $13.5 billion. However, for Intel-based server revenue HP led with $6.9 billion, followed by Dell with $3.3 billion, and IBM with $2.8 billion.