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Intel Sends Mixed Messages

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Intel (Nasdaq: INTC  ) is busy pushing a new line of server-class chips with all its marketing might. The E7 processor family promises low power draws but high performance, making it perfect for high-density blade servers. And the company is pulling every available lever to make the darn thing look good, including this bit of hard-to-read prose: "Builds on Intel's commitment to democratize mission-critical computing by accelerating the migration away from proprietary computing environments."

I'll help you parse that statement right here. The company is simply saying that commodity hardware like the Xeon x86 line is already making specialized chips unnecessary, and Intel is happy to get rid of them. Separately, Intel VP of datacenter products Kirk Skaugen said, "There’s no workload in the world that Xeon can’t handle." All of this is ostensibly a dig at IBM (NYSE: IBM  ) Power7 processors and Oracle (Nasdaq: ORCL  ) SPARC chips more than anything else, but also comes close to calling Intel's own Itanium chips obsolete.

Go back in time with me, just a couple of weeks, to when Oracle said it wouldn't support the Itanium anymore. Hewlett-Packard (NYSE: HPQ  ) cried foul and Intel was careful to reiterate its support for Itanium technology. This week's events only raise more questions about Intel's commitment to Itanium.

At the same time, Canaccord Genuity analyst Bobby Burleson sees Advanced Micro Devices (NYSE: AMD  ) making inroads on Intel's server market with its Hercules chips. AMD's 6% market share in the server segment looks "unsustainably low" to Burleson.

Wouldn't this be an excellent time for Intel to sell off the Itanium product line to its only fan, HP? The resources spent developing that chip could be better spent on Xeons, not to mention putting an end to confusing market messages regarding which high-end chip to buy. Intel is no stranger to producing chips on demand for outside partners, after all.

Will Intel and HP go there? Add the twin high-tech giants to your watchlist and you'll be the first to know.

Fool contributor Anders Bylund owns shares of AMD but holds no other position in any of the companies discussed here. Intel is a Motley Fool Inside Value recommendation. The Fool owns shares of and has bought calls on Intel. Motley Fool Options has recommended a diagonal call position on Intel. The Fool owns shares of International Business Machines and Oracle. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. You can check out Anders' holdings and a concise bio if you like. The Motley Fool is investors writing for investors.

Read/Post Comments (4) | Recommend This Article (1)

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  • Report this Comment On April 08, 2011, at 1:18 PM, TEBuddy wrote:

    AMD made the x86 server market the place to be, AMD made it an affordable venture to own a server. Starting with their Athlon MP lineup. Granted Intel Xeon existed before that, but it was crap. Then AMD introduced Opteron, the real game changer. Intel was happy to charge people a small fortune for specialized processors, until there was real competition.

  • Report this Comment On April 08, 2011, at 2:31 PM, ACCTech wrote:

    Itanium is a total failure and has cost companies like SGI, and others, to go belly up since their systems failed to perform and were stringed for many years by Intel misleading marketing/advise.

    Surprised HP wants to be another victim of Intel's mediocre technology delivery. Larrabee, Itanium, etc. even though HP was the original source of the Itanium design, Intel never delivered and will not because Itanium is not an APU, so it is dead already. AMD would have been a better partner for HP..

    It's worth to note that AMD is the real innovator here who brought x64, and many other technologies, and that Intel just copied many of them and just tried to make it better. Creating advertisings to make it look like they came up with the ideas does not make a Intel an innovating company.

    Though now, Intel cannot do that with the APU's because they lack real graphics/GPU technology/experience, so Intel will begin to slide down for the next couple of years. That is something that money can't just buy.

    If Intel would have had their way, hardware manufacturing companies and all of us will be paying thousands of dollars for obsoleted basic CPU's..

    Thanks to AMD, NVIDIA, APPLE, and other companies that is not the case. Even the Wall Street, investors, and everybody else will be in a stone age if Intel would had eliminated their competition with their unethical practices..

    HP, Dell, Acer, and others need to wake up and not chicken up to Intel unethical practices if they want to make this world better and accelerate the development of technology..

  • Report this Comment On April 08, 2011, at 9:19 PM, BuyemHoldem wrote:

    THANK YOU ACCTech and cudos to AMD for being the REAL leader in the chip space.

    Have any of these "analysts" ever run a side-by-side 10 year chart of INTC & AMD? How can they all be so wrong? Or is it because they are so heavily invested they have to pump up the INTC image?

  • Report this Comment On April 10, 2011, at 9:32 AM, rav55 wrote:

    For starters, there is no AMD Hercules. Do your research you moron.

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