Intel Boosts Key Chip Line

APRIL 6, 2011 THE WALL STREET JOURNAL

By DON CLARK
Intel Corp. moved again to beef up its mainstream chip technology for the toughest computing jobs, targeting longtime rivals while putting more pressure on one of its own product lines.

The company on Tuesday added the most powerful model yet to its Xeon microprocessor line, which has long powered most of the world's server systems. Those chips, derived from the x86 design Intel popularized for personal computers, are a mainstay for chores like running websites and storing files for corporate departments.

Some computer users reserve alternative technologies for what they call "mission-critical" jobs, such as running mainframe systems from International Business Machines Corp. and servers that use chips developed by IBM and Sun Microsystems, now part of Oracle Corp. Intel also sells a separate chip family called Itanium with performance and reliability features for such high-end jobs, a technology whose biggest user is Hewlett-Packard Co.

But Intel has been gradually enhancing Xeons with similar features, and claims with its new E7 models it has closed the gap. "Now we are saying there is no workload in the world that Xeon can't handle," said Kirk Skaugen, the Intel vice president who oversees the Xeon and Itanium effort. The main reason now to choose Itanium, Mr. Skaugen added, is to run software written for the operating systems that work only on Itanium-powered servers. "It's strictly an operating system choice now," he said, rather than a choice about reliable hardware.

H-P doesn't see the situation in quite the same way. Michael McNerney, H-P director of business critical systems, said the special features in Itanium—a chip H-P helped develop in the 1990s—have matured over multiple product generations, and are augmented by H-P-designed accessory chips and software to offer even higher levels of reliability than Xeon-based servers. "Those aren't capabilities we typically see in a Xeon-based system," he said.

Still H-P, which ships the most Xeon-based servers of any company, plans to use the new E7 chip as part of a "complete fleet" of servers for high-end applications, said Mr. McNerney.

The Itanium line, first introduced nearly 10 years ago, has long been controversial because of the development costs to Intel compared with small sales volumes. About 125,000 of the chips were sold in 2010 compared with 14.55 million Xeons, the research firm IDC estimates. Oracle said last month it is quitting further development of software for Itanium-based machines, stating that Intel had indicated Itanium is near the end of its life. Intel denied Oracle's assertion. Mr. Skaugen noted that Intel this spring will discuss a new Itanium model, due out in 2012, and is committed to delivering a follow-on version.

But he says that many customers will prefer the Xeon family, which has been improving more rapidly. For example, the new E7 models boast ten processor cores, or calculating engines, compared with six for prior high-end Xeons. Intel estimates the performance gain over those models at 40%, and more dramatic for a large number of customers using older dual-core Xeons.

Mr. Skaugen said those customers could replace 18 refrigerator-sized racks of servers with one rack powered by the new chip and get similar performance, experiencing a 93% energy-cost reduction—or they could get an 18-fold performance increase in the same amount of space. "We haven't been able to give data like this in 20 years," Mr. Skaugen said.

Advanced Micro Devices Inc., which has been adding its own reliability features to x86 chips, sounds less impressed. It sells a 12-core server processor today—assembled from two six-core chips packaged together—and is expecting to offer a 16-core offering later this year.

John Fruehe, director of AMD's server product division, believes his company also has a big price advantage. The top end of the Xeon product line increases to $4,616 with the E7 launch—compared to $3,692 currently—and $1,514 for the 12-core Opteron. "They've kind of jacked the price up," he said.
Besides H-P, companies discussing plans Tuesday for systems based on the new Xeon chip include Dell Inc., Silicon Graphics International Corp., Super Micro Computer Inc. and Cray Inc.

Write to Don Clark at don.clark@wsj.com