Dell Halts Itanium Workstation Production

Dell Computer Corp. is discontinuing its Itanium-based workstation due to slow sales, according to sources at the company. The withdrawal of the Dell Precision Workstation 730 would mark another setback for Intel Corp., which has been trying to boost the relatively lackluster sales of its first 64-bit processor since its release in May.

According to several market research companies, computer makers have shipped relatively few Itanium-based workstations and servers. According to figures compiled by Gartner Dataquest, computer makers have shipped more than 1,700 workstations and 2,600 servers based on Itanium worldwide this year.

Numbers compiled by International Data Corp., of Framingham, Mass., confirm Itaniums minor stature in the market, with sales of systems featuring the chip accounting for only about 1 percent of worldwide server sales in the third quarter.

Given the lack of demand, its not surprising that Dell is abandoning the workstation, said Pia Reippo, a Gartner analyst, in San Jose, Calif. "Sales havent been very big, and theyre a volume player, so it doesnt make sense for them to be in that market at this stage," Reippo said. "Theyll probably wait and see what happens when the next generation of Itanium, known as McKinley, is introduced [next year] and see whether sales take off or not before deciding whether to offer it again."

Indeed, Compaq Computer Corp., the worlds largest seller of Intel-based servers, disclosed last month that it had still not shipped its new Itanium-based server, the ProLiant 590/64, which was first announced in July, because the system failed to pass stress tests conducted by Compaqs labs.

Intel later said the problem resided with the BIOS software packaged with the processor and that around Thanksgiving it had issued a modified BIOS. Compaq, of Houston, received the BIOS modification, but a spokesman said the company plans to conduct further tests on the Itanium server and has yet to decide when the systems will ship.

Currently, the 64-bit processor market is dominated by Sun Microsystems Inc., IBM and Hewlett-Packard Co., with each company offering Unix-based hardware built using their own RISC-based 64-bit chips and tied to proprietary software. But Intel is hoping to carve out market share by targeting companies that want high-end servers based on Microsoft Corp.s new 64-bit Windows operating system.

Itaniums sales are slow in part because the chip utilizes a new and unique architecture, which requires the use of customized operating systems and application programs. Relatively few of todays most common business applications can operate on an Itanium-based system.

The move by Dell, of Round Rock, Texas, marks the latest problem for Intels efforts to spur adoption of Itanium. The Santa Clara, Calif., chip maker spent hundreds of millions of dollars and more than seven years developing the technology, but its launch was hampered by several significant delays.

Despite the setbacks, an Intel spokeswoman said the company is happy with the adoption and expects sales to heat up with the release of the second version of Itanium, due next year.