Intel in tough fight, even with Montecito

It wasn’t so long ago that Intel stood confidently astride the entire tech sector, superstar maker of the microprocessors that drive innovation. But like Hollywood celebrities who suddenly find their star overshadowed, Intel has been engaged in some aggressive liposuction recently, making surprising sacrifices to slim down and regain its stature. In just the last few weeks, Intel sold its communications and application processor businesses to Marvell and made cuts to its management staff.

With the official launch of the dual-core Itanium 2 processor 9000 series, or “Montecito,” last week, however, Intel paused its makeover to send a strong message about its commitment to its most advanced, and until now, most neglected CPU architecture.

Montecito’s delays (it was supposed to ship at the end of 2005) raised the possibility that the extremely low-volume Itanium 2 would languish as a second-class architecture. Montecito’s release means there will be more Itanium 2 models to come.

Still, Intel has snatched defeat from the jaws of victory with Itanium 2 before. The company finally scored first-class Windows support with Windows 2003 Server. But with such a tiny installed base, only the biggest software vendors are buying.

In the market for high-performance rack servers, technology-sharing agreements with AMD and others keep IBM’s POWER at the forefront of the process technology on which all objectives depend: more cores, more cache, higher performance, faster buses and lower power. Those who have already invested in Itanium 2 will heave sighs of relief at Montecito’s appearance. A second core and extra cache won’t steal market or mind share away from IBM, though.