Microsoft's Itanium, Server Decisions Hint at Business Shift

By Nicholas Kolakowski  |  Posted 2010-04-06

Microsoft's Itanium, Server Decisions Hint at Business Shift

Microsoft's recent decision to end support for Intel's Itanium chip in its server architecture, along with the elimination of its Essential Business Server (EBS) development, suggests that the company is trying to reposition to take advantage of several developing business IT trends, including virtualization and cloud computing. That paradigm shift is also mirrored on the consumer side, where at least one analyst has seen the recent wave of products as evidence that Microsoft is trying to retake ground lost over the past couple of years to Google and other companies.

Microsoft plans on ending support for Intel's Itanium chip in its server software was based on the belief that later advances in chip technology have made its architecture dispensable. As a result, Windows Server 2008 R2 will likely be the last version of Windows Server to support Itanium. Intel's EPIC (Explicitly Parallel Instruction Computing) architecture chips will receive their last go-round from Microsoft in the SQL Server 2008 R2 and Visual Studio 2010 products.

"The natural evolution of the x86 64-bit (-x64') architecture has led to the creation of processors and servers which deliver the scalability and reliability needed for today's -mission critical' workloads," Dan Reger, a Microsoft senior technical product manager, wrote in an April 2 post on the Windows Server blog. "Just this week, both Intel and AMD have released new high core-count processors, and servers with eight or more x64 processors have now been announced by a full dozen server manufacturers. Such servers contain 64 to 96 processor cores, with more on the horizon."

Extended support for Itanium-based systems and R2 will continue through July 2018, added Reger. "Microsoft will continue to focus on the x64 architecture and its new business-critical role, while we continue to support Itanium customers for the next eight years as this transition is completed."

Although Intel's plans for Itanium ostensibly extend well into the future, Intel executives have publicly stated that they expect many mainframe and HP-UX-based machines to migrate to eight-core Xeon 7500 "Nehalem EX" processors over time. The Xeon 7500 processors, which offer three times the performance of previous Xeons, are targeted at high-end servers such as RISC systems and mainframes that currently leverage Itanium for their architecture.

Microsoft's fine-tuning of its business offerings, the better to adjust to a changing landscape, was also evident in its March 5 announcement that it will discontinue future development of its Windows Essential Business Server (EBS), effective June 30. Although it had been meant as an IT infrastructure option for midsize businesses, EBS found itself apparently outpaced by advances in cloud computing and virtualization; tools in those areas were already integrated into offerings such as Windows Server 2008 R2 and BPOS (Business Productivity Online Suite), leading Microsoft to finally terminate EBS.

"This decision to not ship future versions of EBS does not come lightly and will not impact any other Windows Server products and solutions," read an unsigned note about the issue posted on the Windows Essential Business Server Team Blog on March 5. "As a matter of fact, we are working hard to build the next version of Windows Small Business Server (SBS) and look forward to a second decade of success with this award-winning small business offering."

Those Microsoft employees currently working on the EBS product development team are apparently due to be shifted over to other projects within the Microsoft Server and Cloud division, while current EBS customers can expect a five-year mainstream and five-year extended support cycle for their product.

In a March 5 e-mail to eWEEK, a Microsoft spokesperson termed the elimination of EBS as a "streamlining" of the company's product portfolio. "This decision represents a natural market shift in midsize businesses' preferences toward creating their own IT solutions."

Paradigm Shift


While Microsoft seems to be positioning its server business to take advantage of what it sees as the future of processor architecture, cloud computing and virtualization, its recent moves on the consumer side also hint at a paradigm shift of sorts.

In an April 5 research note, Jefferies & Co. analyst Katherine Egbert suggested that Microsoft has begun to emerge from a "Dark Ages" period between 2004 and 2007, when a combination of weak product cycles, lawsuits and reduced research-and-development spending forced it to lose ground in various areas to companies such as Google and Apple.

"Microsoft was historically a successful fast follower, but the anti-trust area brought a dip in R&D and several weak product cycles," Egbert wrote in that report. "Bing, Azure, WP7 and Natal are the first post anti-trust products. Their success will be key in determining if Microsoft can recapture the consumer's imagination."

The resolution of Microsoft's EU antitrust case in the beginning of 2008, Egbert added, marked a rise in investment in "non-desktop based services" that in turn led to products such as Natal, Azure, Office 2010, Bing, Windows Phone 7 and Xbox 360. However, even these new products will not "significantly impact revenue growth for several years," although they will increase Microsoft's addressable market, or the total potential market for a particular product or service, by 53 percent.

"They must rely on innovation and a traditional fast follower strategy to try and stay relevant," Egbert wrote. "They have a lot of market share to protect and their competition is well-entrenched. We don't know yet if this new crop of post-litigation products can help Microsoft recapture the imagination of consumers and shift the attention of application developers back to its platforms."

Microsoft is also working with companies such as Ford to develop technologies beyond the mobile and desktop sphere, including energy-monitoring software for vehicles.

Before Microsoft could reach that point with its consumer products, however, it went through a round of bloodletting over the past 18 months that saw the systemic elimination of many legacy products, including Encarta, Soapbox, Money Plus, Popfly, MSN Groups and PerformancePoint Server 2007. Other products were completely rebranded, such as the company's Live Search becoming Bing.

Much of Microsoft's focus in both its business and consumer endeavors is the cloud. "We shipped Windows 7, which had a lot that's not cloud-based. Our inspiration now starts with the cloud," CEO Steve Ballmer told an audience during a March 4 talk at the University of Washington. "Windows Phone, Xbox, Windows Azure and SQL Azure ... this is the bet for our company."


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