Intel Nehalem Xeon Processor Could Hurt Server Sales

Intel's Nehalem Xeon processor launch could potentially make Intel a leader in the hardware virtualization space and spur more virtualization projects, but it's not likely to sell any more server hardware. That could be bad news for server vendors such as Dell, Hewlett-Packard and IBM.

IT solution providers who sell into large businesses are eagerly awaiting the arrival of servers based on Intel's Nehalem Xeon server microprocessor because it is built with virtualization in mind, but they aren't expecting the technology's arrival to boost server sales.

Intel's new microarchitecture, which builds a memory controller right onto the chip, plus the additional memory channels available in this new CPU, are a couple of the features that make the microprocessor the best x86 hardware available for virtualization. Intel first released the microarchitecture in processors for PC workstations last year.

But when you put the worst recession in 50 years together with the rise of virtualization, the combination spells disaster for anyone relying on server hardware sales to make a living.

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