This summer Intel will release Itanium 2, the second version of its 64bit processor. While much emphasis will be put on the chip's 64bit architecture, the benefits of such an architecture are far from clear from a technical viewpoint. However, the practical benefit to firms will be lower prices for mid-range and high-end systems.

From a technical perspective, the advantage of a 64bit architecture is that it can handle extremely large and very small numbers more accurately. Vendors argue this means that 64bit chips can access more RAM than 32bit chips, which in turn makes them a good choice for applications such as data mining that need to access lots of data from fast memory. However, Intel's latest 32bit chip, the 1.6GHz Xeon MP processor, can access 64GB of RAM, and there seems to be nothing to stop this limit being raised in future if required.

The Itanium 2 can access a maximum of 16TB RAM, but it is unlikely that many systems will be configurable with anything like this amount of memory. Most Itanium 2 systems are expected to be configurable with a maximum of 128GB, and most will be bought with no more than 64GB. At today's prices, 64GB of RAM costs about £50,000.

A 64bit processor may also provide more precision in floating-point mathematics. Floating-point calculations are used by some encryption algorithms, so the Itanium could find a niche role in securing e-commerce. Designers, architects and scientists may also benefit from this capability, but most firms will not. In contrast, the Pentium family is judged unsuitable for some computer-aided design (CAD) applications because of its limited mathematical precision.

Before Itanium, vendors of Intel-based servers were limited to making systems based on the established x86 architecture. These chips were very successful in the low-end server market, where systems are fitted with no more than four processors. However, the market for Intel-based servers fitted with more than four processors proved to be extremely small.

For example, the Unisys ES7000 server can be fitted with 32 processors but fewer than 500 units have been sold throughout Europe since the system was launched some 18 months ago.

In contrast, vendors of mid-range systems based their products on proprietary chip designs, such as the UltraSparc III from Sun, or the Power4 from IBM. While these systems were well received by corporates, their price was often much higher than the price of Intel-based servers. These higher prices were obviously unpopular with both vendors and their customers. Server makers wanted to reduce their development costs by moving from their own chips to chips developed by a third party such as Intel. To put these costs into context, 64bit market leader Sun Microsystems had worldwide revenues of around $14bn in 2001, and spent some $2bn on R&D in the same period.

After seven years in development, Intel launched its first Itanium chip on 29 May last year. At the time Intel clearly described the processor as suitable for software developers, and unsuitable for production systems. Some optimistic vendors marketed systems based on this chip, but quickly found those systems did not sell in sufficient quantity and some of the products were withdrawn.

Part of the problem was that at the time the chip was released there was no version of Windows to run on it, and consequently no support from independent software vendors. With better support for a range of operating systems including Linux and Windows, the Itanium 2 will be better supported by a range of application software, and is expected to enjoy better sales.

So, while vendors held back from marketing systems based on the first Itanium chip, most are now very keen to offer servers based on the Itanium 2.

For some vendors this will be a new venture, but others such as HP have a long history in the mid-range server market. Itanium 2 systems from these vendors will eventually support the vendor's proprietary Unix environment. In addition, Itanium 2 systems will also be able to run Linux and Windows software.

For the first time, enterprises will be able to use the same hardware platform for Unix, Linux and Windows. In some cases, partitioning tools will enable these servers to run all three operating systems simultaneously.

The new chip could also lead to a reduction in the price of high-end systems, although the scope for savings is a little more limited. This is because the value of high-end systems is not linked so closely to the price of the processors. Hardware fault tolerance, workload management tools, and consultancy to aid integration raise the costs in this market. Sun is strong in these areas and has therefore become a market leader, even though its UltraSparc based servers consistently score lower than competitors in benchmark tests.

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