Hewlett-Packard is getting out of the chip-making business. The company on Thursday announced that it reached an agreement with Intel that would see HP's Itanium processor design team move to Intel in January. The agreement effectively puts an end to the last microprocessor development effort within the company.
The group of several hundred engineers, based in Fort Collins, Colorado, had been working with Intel on Itanium since the 64-bit processor was first conceived in the early 1990s. Intel initially planned the processor as a general replacement for its 32-bit line of x86 processors. Since its introduction, however, Itanium has failed to be broadly accepted in the market, but it has seen some adoption as a high-end server processor.
Thursday's announcement is part of a revised strategy on the part of Intel and HP that presents Itanium as an alternative to the RISC (reduced instruction set computer) chips built by companies like IBM and Sun Microsystems. "The conclusion that we've reached is that no, you can't go the entire range with one product. You actually need two," said Rich Marcello, senior vice president and general manager of HP's Business Critical Servers group. "This is a kind of validation of that."
Though HP has long promoted its codevelopment of the Itanium processor as a competitive advantage, the relationship hampered the chip's adoption by other system vendors, which saw HP as having an unfair advantage in the space, Marcello said. "You can actually, believe it or not, have too much market share," he said. With Intel now the sole developer of Itanium, both companies hope that the processor will be more widely adopted in the market.
As part of the revised strategy, HP will now refocus its Itanium efforts on system and software design, and on helping independent software vendors port their applications to the platform, Marcello said.
He declined to comment on the specifics of his company's deal with Intel, which was signed last week, but Marcello said that Intel has now agreed to produce Itanium processors into the next decade. "We are entering into a long-term relationship with Intel, which essentially guarantees us a supply of IPF (Itanium product family) chips for a very long period of time," he said.
HP, for its part, will increase the amount of money it spends on Itanium-related development, at least in the short term. The company will spend US$1 billion per year over the next three years on Itanium systems and software, with part of that investment going toward a new design center for HP's Itanium-based Integrity servers that will open in Singapore. The center will focus on designing low-cost systems for servers with less than four processors, Marcello said.
HP will also spend more money developing virtualization capabilities for the Integrity products, which will become more flexible and configurable as these capabilities are added over the next year, Marcello said.
Bringing Itanium's development under one roof may assuage rival computer maker's concerns about HP's special relationship with Itanium and could also smooth out the microprocessor development process, said Gordon Haff, an analyst with industry research firm Illuminata Inc. Still, Haff was surprised that Intel would want to take on additional development responsibility for Itanium, given the processor's lack of success. "Intel had certainly been giving the appearance of pulling back from Itanium over the last year or so," he said.
With HP recently handing over the development of high-end Unix clustering and file system capabilities to Veritas Software, Thursday's announcement appears to be part of a broader plan to refocus its product development work, Haff said. "HP is outsourcing everything they can," he said.