HP plans to adopt Itanium family of processors in all its servers, including the most high-end machines that cost more than $1 million by 2006. Such servers usually bring 35% to 40% profit margins what is considerably higher than 10% on ordinary servers. On the other hand, there are concerns about such servers’ adoption by the industry, keeping in mind the fact that last year Intel sold just 3.5 thousands of Itanium processors last year, according to IDC.
HP co-developed Itanium 2 processors with Intel and, in fact, spent quite a big sum on R&D, hence, now it is logical for it to drop one of its CPU lines and consolidate its server families of CPUs.
It is hard to tell whether Carly Fiorina’s move is the right or wrong one. Her previous decisions were risky, but proved to be wise enough. Now the world is changing and the industry is changing, maybe all those cardinal and sometimes extraordinary decisions are really needed?