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Intel and HP spent nearly a decade creating and developing Intel’s 64-bit architecture. The first child of the family was born 2 years after the original schedule, but eventually became a rather successful chip after Intel managed to sell more than 70 000 of Itanium processors worldwide to software developers alone. Unfortunately, according to a Bloomberg report, the more powerful Itanium versions of the core did not achieve the results Intel desired from it because the parental company only sold 3500 of them. Despite of this fact, Carly Fiorina, the CEO of HP insists to cancel developing HP’s own processors, but to start pushing the IA64 CPUs more aggressively and to save up to $500 million a year on R&D of PA-RISC processors.

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?


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