64-bit Chips

The Economist writes:

With Opteron, AMD’s approach was to take an Intel-compatible 32-bit chip, and add special 64-bit extensions to it. The resulting chip is able to support more than four gigabytes of memory, and can run new, faster 64-bit software. Crucially, it can also run existing 32-bit software in the usual way. Intel’s approach, in contrast, was to start with a clean sheet and design an entirely new 64-bit chip, called Itanium. The project is in fact a joint venture with HP, which began work on the chip in 1988. Since its launch in 2001, years late, Itanium has sold slowly: a mere 100,000 chips were sold last year. Itanium systems are powerful, but they are expensive and cannot run existing 32-bit software efficiently. To get the full benefit from Itanium, software must be extensively rejigged.

Fred Weber, technology chief at AMD, likens Itanium to Esperanto. Nobody wants to learn a new language, he says, no matter how elegant it is. Hence the appeal of AMD’s chip, which offers cheap 64-bit power without compromising the performance of existing 32-bit software. HP’s announcement that it will use Opteron chips, and Intel’s announcement of an Opteron-like Xeon chip with 64-bit extensions, therefore appear to be very bad news for Itanium, and a vindication for AMD.

Intel denies that Itanium is doomed, however, with some justification. Itanium is intended to compete with other 64-bit chips (such as those made by Sun and IBM) at the very top end of the market, says Lisa Graff of Intel. That is a totally separate market from the low-end servers powered by Xeon and Opteron chips. Around 85% of servers sold cost less than $6,000. But the 15% that cost more account for 50% of server sales by revenue. Itanium is aimed at this low-volume, high-end market. HP, for its part, says that it remains committed to Itanium in its high-end systems.

Another factor in Itanium’s favour is that its performance is expected to improve dramatically over the next few years, notes Dean McCarron of Mercury Research, a market-research firm based in Scottsdale, Arizona. By 2007, Intel expects Itanium and Xeon chips to cost about the same, but the Itanium chip will be twice as fast. In other words, Itanium will start at the high end, and will slowly move down towards the mass market. The trouble is that Intel’s previous predictions about Itanium have been wide of the mark.

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Rajesh Jain

An Entrepreneur based in Mumbai, India.