In with the big boys
"That's a huge opportunity," Hackborn said. If Hewlett can exploit that opportunity, he added, "That puts the new HP on a comparable footing with Intel and Microsoft."
There are other benefits for Hewlett-Packard. The Itanium allows the company to eliminate both of its current 64b chips -- the HP PA-RISC and Compaq Alpha. That alone should save the company US$200 million to US$400 million annually in development and manufacturing costs, according to Steven M. Milunovich, an analyst at Merrill Lynch.
Yet if Itanium fails, he said, "the real loss is the opportunity cost."
In the commercial market, HP badly needs a credible strategy and a marketing message. Itanium, Milunovich said, is an essential part of the plan establishing Hewlett as the leading packager and integrator of Itanium-based systems.
"If everything works according to plan, HP could be best positioned to be the company to take PC economics into the enterprise," Milunovich said.
If Itanium fails, he added, HP will be forced to go with Yamhill or AMD, and it will lose its hoped-for advantages in making large data-serving computers.
In the end, Itanium may be most vulnerable to a force that neither Intel nor HP can control: the economy. Even if Itanium proves a technical success, the most powerful incentive for companies to shift to it lies in the high-performance computing power needed for ambitious new information technology projects. But in the sluggish economy, few companies are increasing capital spending.
"The real challenge to the Itanium may have less to do with marketing and design and more to do with a collapsing economy," said Michael Shulman, an analyst at ChangeWave, a research firm in Potomac, Maryland.
Shulman's firm regularly asks corporate information technology managers about spending plans. From last summer to this summer, he said, interest in the Itanium eroded sharply as spending on new computing projects was reined in.
"The common view is, `If it doesn't save us money we have no interest in it,'" Shulman said. "It's a very hard-nosed view."
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