HP to sell Opteron-based servers

Duncan Martell

SAN FRANCISCO: Hewlett-Packard Co. will begin using Advanced Micro Devices Inc.'s Opteron chip in server computers, according to people familiar with the matter, adding momentum to AMD's challenge to industry leader Intel Corp. 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. already sells servers that use AMD's 64-bit Opteron processor and Sun Microsystems Inc. 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."

© Reuters