A Backup Plan for Intel

Itanium alternative reportedly under development.

While Intel Corp. has spent the past eight months touting its Itanium processor, it reportedly also has recently been developing an alternative 64-bit chip it can turn to should the Itanium flop.

Analysts have long suspected that Intel was developing this alternative, but recent reports of the work surprised some Itanium users and could undermine current sales efforts and indirectly help rival Advanced Micro Devices Inc.

Details about Intels alleged covert chip development surfaced Jan. 25 in a report published by the San Jose Mercury News. Citing unnamed sources, the newspaper said several senior Intel engineers critical of the Itaniums architecture, developed over seven years at a cost of more than $1 billion, were given the go-ahead by top executives to design an alternative 64-bit processor based on the X86 design used in the companys Pentium line.

Known internally by the code name Yamhill Technology, the alternative 64-bit chip designed for high-performance computing reportedly is being developed at Intels facilities in Hillsboro, Ore. While Intel spokesman Howard High, in Santa Clara, Calif., declined to comment on the report, industry analysts said the story confirmed what they had long suspected.

"Its really just insurance," said Kevin Krewell, a chip analyst with Cahners In-Stat/MDR, in Sunnyvale, Calif. "But, of course, its something they dont want people to know about."

Word that Intel is developing an alternative 64-bit processor based on its popular Pentium design could undermine its efforts to sell computer makers and corporate customers on the Itanium, which features an entirely different architecture and requires users to adopt new software to run.

So far, the Itanium has attracted few buyers. Since its release in May, the chip has appeared in less than 1 percent of all 64-bit servers sold, according to Gartner Dataquest, in San Jose, Calif. Intel said its confident sales will pick up when it releases a faster version of the chip, code-named McKinley, by midyear.

But for many companies, the rumored alternative design based on the Pentium X86 architecture would be more attractive. "A lot of customers evaluating Itanium would say, Well, if we could have a compatible chip that does a lot of what Itanium does but is also more compatible with our existing 32-bit software, that might be a better deal for us," said Nathan Brookwood, an analyst with Insight64, in Saratoga, Calif. "That could take the wind out of the Itanium sails."

Word of Intels reported backup plan caught Itanium users off guard.

"I first heard about it just a few minutes ago from a colleague," Mahlon Stacy, system administrator for Mayo Foundation Medical Science, in Rochester, Minn., said when contacted soon after the initial reports were published. But while his staff has already worked to port some of its applications to its Itanium systems, Stacy said the Mayo Clinic still could readily adapt should Intel switch architectures.

"As a research department for a medical institution, were fairly flexible and can roll with the punches," he said.

But software vendors that have invested millions in recompiling their programs to work with the Itanium could be left holding the bag.

"I cant imagine them doing something like that this late in the game," said an executive at one such company, who asked not to be named.

However, Intel made a similar move in the early 1980s, and the move paid off. At the time, Intel touted the IAPX432 as the basis for its transition from 16-bit to 32-bit processors. "It was going to be a revolutionary processor," Cahners Krewell said. "But it was about 10 years ahead of its time in terms of process technology and chip integration point of view—and totally flopped."

But Intel had a backup plan, as a team of engineers designed an alternative 32-bit chip based on the companys 16-bit 286 design. That processor, known as the 386, served as the foundation for Intels highly successful Pentium line.

While Intels reported secret development efforts may once again prove a wise move, they may also inadvertently benefit the companys longtime rival.

AMD, of Sunnyvale, is planning to introduce a 64-bit processor based on the X86 architecture, similar to Intels reported alternative design. But for the chip to be successful, AMD needs Microsoft Corp.s support.

"AMDs X86 64-bit processor has an uphill battle with one really key vendor, Microsoft. If AMD doesnt get support, its chips are only going to be of interest to a relatively small group of Linux hackers," Krewell said. "But if Intel has plans for such a chip, then Microsoft has to do it."

AMD said word of uncertainty about the Itanium within Intels ranks should give customers pause. "Its not just Intel making a bet here on Itanium, its CIOs who have taken a chance and bought Itanium machines, or the software developers that have spent $100 million porting software to Itanium, that are at risks," said Pat Moorehead, AMDs vice president of customer advocacy. "After hearing about how Intels wavering, they are going to be asking the question, Hey, whats going on here?"