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In Big Switch, Intel Will Offer 32/64-Bit Chip

Itanium sales lag, so company offers combo chip to better compete with rival AMD
After hinting for more than a year that it might need to offer companies a bridge between today's computer design and tomorrow's, Intel last week uncorked what CEO Craig Barrett called "the worst-kept secret in San Francisco" and confirmed plans to start delivering chips that can switch between 32-bit and 64-bit modes.

Intel had little choice. Sales of its high-end Itanium chips have been slower than predicted, and rival Advanced Micro Devices Inc. is grabbing market share with a 32/64-bit design that can run memory-hungry video-editing and engineering applications in 64-bit mode while also handling 32-bit software. "When AMD drew a line in the sand, it was simply a matter of time" before Intel had to respond, says Clark Fuhs, an analyst with securities research firm Fulcrum Global Partners.

During the second quarter, Intel will release a server version of its 32-bit Xeon chip with 64-bit extensions that can switch between modes depending on the needs of software. Eventually, the 64-bit extensions will find their way into desktop Pentium chips, though Intel won't say when. In April, Microsoft plans a wider release of beta versions of Windows that support both Intel's and AMD's mode-switching chips, with final versions due later this year. "Customers can get access to higher-performance processors today, on a platform they know," says Microsoft senior director Jeff Price. Also on tap from Microsoft: a new version of Visual Studio for writing apps with the new 64-bit extensions. Intel says versions of Linux that support the design also are coming soon.

Offering customers a way to get 64-bit processing on less-expensive x86-based computers is a strategic about-face for Intel. It could cut into sales of Itanium chips aimed at the lucrative market for expensive servers controlled by IBM and Sun Microsystems. "The previous concept was that after users had maxed out 32-bit capability, they would move over to Itanium," says Joseph Byrne, an analyst with Gartner. "That strategy hasn't panned out."

About 10,750 Opteron servers left factories during the third quarter of last year, compared with fewer than 5,000 Itanium systems, according to market researcher IDC. Intel has invested billions in Itanium since it started designing the chips with Hewlett-Packard a decade ago. But if Intel can't sell the chips in greater numbers, Byrne says, the company could find it difficult to sustain the level of research and development necessary for Itanium to remain competitive. That could leave Itanium customers in the lurch if Intel pulls the plug. "They really emphasized Itanium's position as a niche product. Itanium was always a risk, and perhaps it's even more apparent now," he says.

Not true, says Intel chief technology officer Pat Gelsinger. "Our Itanium position doesn't change one bit," he says. Yes, some heavy-duty users of computer-aided design software, Adobe Photoshop, and Alias video-editing suites will benefit from being able to address more memory than the 4-Gbyte limit currently imposed by x86. But Intel's mode-switching chips "don't attack enterprise-class apps," Gelsinger says. "Memory addressability is one feature, but Itanium offers more security, fault tolerance, bigger caches, and higher-memory bandwidth."

For many customers, though, cost trumps features. The U.S. Army last week said it's buying a high-performance 2,132-computer cluster from Linux Networx that uses Intel Xeon chips with the 64-bit extensions. "The size of the system comes out based upon the amount of money we have available," says Charles Nietubicz, the acting deputy director at the Army Research Laboratory.

Dell, HP, IBM, and Unisys last week said they'll sell systems with Intel's new design, but the vendors are hedging their bets. IBM and Sun Microsystems sell AMD's Opteron systems, and HP says it remains an option.

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