[Vms.sig-hu] Press Release: HP to Begin Offering Opteron-Based Servers - OK for External distribuiton (fwd)

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The next message not a HP press release but an article


Technology News	
Friday, Jan. 30, 2004 	
HP to Begin Offering Opteron-Based Servers
		 	 
 	 
 	 SAN FRANCISCO (Reuters) - Hewlett-Packard Co. (HPQ.N) will
begin using Advanced Micro Devices Inc.'s (AMD.N) Opteron chip
in server computers, according to people familiar with the
matter, adding momentum to AMD's challenge to industry leader
Intel Corp. (INTC.O) in supplying the lucrative market for
corporate computers.


The move is significant because HP has been Intel's primary
partner in rolling out Itanium, its competing 64-bit processor,
a chip credited as a sharp advance in computing power but which
has been slowed in the market by its higher price.


AMD has staked its future to the success of its rival
64-bit technology, including Opteron, and analysts said HP's
decision to use AMD's processor underscored the growing
strength of the market for low-end -- or volume -- servers.


"2004 is going to be a watershed year for the volume server
market, the Intel and AMD part of the market," said Mark
Melenovsky, an analyst with market research firm IDC. "It's
maturing to the point where it's being used in more places in
the data center."


HP rivals International Business Machines Corp. (IBM.N)
already sells servers that use AMD's 64-bit Opteron processor
and Sun Microsystems Inc. (SUNW.O) announced its embrace of
Opteron earlier this month at Comdex and will start shipping
servers using the chips next month.


Opteron, like Intel's far more expensive 64-bit chip
Itanium chip crunch 64 bits of data at a time compared with the
32-bits processed at once in the ubiquitous Intel-standard, or
x86 chips. Opteron and Itanium are faster at data-intensive
computer uses than the 32-bit variety that Intel's Xeon server
chips represent.


Opteron, which launched in April 2003, has been adopted not
only by major vendors such as IBM, but also by a wide range of
second-tier, or "white box" server makers.


HP declined to comment specifically on its plans for
Opteron, but said in a statement that it "acknowledges customer
demand for support from a trusted vendor for x86 extensions
technology in certain market segments. ... HP is currently
assessing our options in this area."


AMD, based in Sunnyvale, California, declined to comment.


But analysts and money managers said that by using the
Opteron chip HP could look to prevent customers from turning to
IBM and Sun for Opteron-based servers.


"That's not something HP wants to have happen," said Dan
Niles, chief executive of San Francisco based Neuberger Berman
Technology Management. "HP's customers want this, therefore HP
is going to offer it."


Nathan Brookwood, an analyst with market research firm
Insight 64, agreed.


"Sun will be out there next month with Opteron, IBM is
selling them," Brookwood said. "HP is definitely in a mode
where they don't want to cede market share to anybody and they
don't want to tie one of their hands behind their back."


For now, Opteron is targeted principally for servers that
cost $25,000 or less and Itanium servers can cost $50,000 and
far more, but Opteron is making some headway against Intel's
Xeon, the dominant processor in the x86 server market.


"Opteron is beginning to make a little inroad into the Xeon
market," Brookwood said, adding that currently Opteron is
viewed as a cheaper alternative to Xeon, rather than a direct
rival to Itanium, because the designs of the Itanium and
Opteron chips are different.


As AMD makes some long-sought gains in the lucrative server
market, HP has to take care not to confuse customers regarding
its strategies for Opteron and Itanium, analysts said.


"Should they move to Opteron, clearly HP is going to need
to communicate why that won't hurt Itanium," Brookwood said.
"The challenge is how to do that without creating a perception
that Itanium isn't cutting it."  (Additional reporting by
Daniel Sorid)