IDC Research lately reviewed its Intel Itanium 2 sales estimates and had to lower them once again, as even though the processors are adopted by those interested in high-performance 64-bit machines, the pace of such adoptions is not as high as Intel might like it to be.

Last year the Santa Clara, California-based chipmaker supplied around 100 thousand of its IA64 processors. The number may seem relatively huge, unless we do not take into account sales of Intel Xeon processor that amount in millions. Every Itanium 2-based system costs more than $10 thousand per a 2P box and that makes Intel’s 64-bit architecture not enough affordable for quite a lot of customers who already have 32-bit machines up and running. In addition, Itanium 2 systems require new software making upgrade to IA64 systems even less cost-effective for typical companies.

Research firm IDC in 2000 predicted that Itanium server sales would hit $28 billion by 2004. In 2001, IDC predicted sales of $15 billion by 2005, and lowered its forecast later that year to about $12.5 billion. Now, the forecast is for $7.5 billion in 2007, according to CNet.

Intel will now try to do everything to cut down the costs of actual Itanium 2-based servers. The chip company is likely to develop a core-logic able to handle both Xeon and Itanium 2 chips, such as IBM Summit, to allow companies to spend less money on engineering; though, no details about its timeframes are discussed at the moment. Additionally, there are sub-$1000 Itanium 2 processors coming out later this year.

The elimination of price difference between Xeon and Itanium hardware may permit Intel to phase-out the former in favor of the latter. Nevertheless, the company will still have to explain potential customers the need to spend rather lot additional funds on IA64 software, as Intel’s Itanium processors only unleash their potential in environments specifically tailored for them and cannot offer a lot of power in conventional 32-bit apps.

Intel may try to limit evolution of Xeon chips in order to show Itanium in better light at some point forcing migration to 64-bit processors. But this is not really likely to happen, as Intel has a rival – AMD – who is addressing both 32-bit and 64-bit markets with its Opteron processors and who may have a lot of chances in both fields. As a result, Intel will have to work in both hardware and software directions.

Frankly speaking, 2006 – 2007 seems reasonable target for Intel Itanium systems to be massively adopted not only by very large enterprises, but also by medium and small businesses, as there will be more IA64 software on the market. In case in 2006 – 2007 Xeon and Itanium servers’ cost is equal and there is enough 64-bit software for the latter, there will be very positive environment for IA64, as the Itanium surely offer more performance than the Xeon.