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Mr. Fister argues that the debate about the complexity of writing software for the new chip design — a crucial issue if Itanium is to succeed — will soon be put to rest, as important software applications arrive for Itanium from companies like Microsoft, Oracle and SAP.
Even if Itanium overcomes the software bottleneck, Mr. Fister will face another challenge soon: positioning Itanium against a new 64-bit Opteron from Advanced Micro Devices, Intel's closest rival in the personal computing world.
Intel and Hewlett-Packard chose to start from scratch with a new design for Itanium, requiring programmers to rewrite applications. AMD has taken a more compatible approach.
Opteron, which will begin shipping next year, is based on the original Intel-designed X86 instruction set. That means the chip will run all existing software intended for other Intel chips, as well as compatible processors, with only minor alterations.
At a technical conference in Silicon Valley in the summer, computer designers were impressed when AMD said the new 64-bit extensions to the existing 32-bit chip required only 2 to 3 percent more silicon. That, they said, is a small price to pay for a 64-bit chip that can also run software applications written for existing 32-bit chips. "We believe customers want an easy migration path to 64 bits," said Marty Seyer, a vice president at AMD.
Until recently, AMD has been largely ignored by Intel because it has not been a significant factor in the corporate computer server market. But if AMD finds success with a high-visibility computer maker like Dell, that could change fast. In fact, Dell has said that it is looking closely at using Opteron.
"This is the first time AMD has had a value proposition that is more than just price," said Randall D. Groves, vice president for computer servers at Dell. "That's something we have to take seriously." Dell, he added, will probably make a decision before year-end on whether to buy AMD chips.
The AMD challenge has led Intel to quietly begin a project, called Yamhill, in Oregon. There, a team of Intel engineers is trying to build a 64-bit extended version of its own X86 Pentium chips, just like AMD's Opteron.
AMD's reputation in chip design is better than its reputation for manufacturing and business execution. But regardless of Opteron's fate, the Yamhill project itself could present thorny problems for Intel. If Yamhill shows an easier path from 32- to 64-bit computing than the costly rewriting of software applications, as the shift to Itanium requires, corporate customers will be reluctant to move to Itanium.
Mr. Fister was coy about Yamhill in an interview at Intel headquarters in Santa Clara, Calif. Intel has never publicly acknowledged Yamhill's existence. But he suggested that AMD might encounter difficulties with Opteron. "It may not be as simple as people think it is to take advantage of a 64-bit processor," he said.
Then, all but acknowledging Yamhill, Mr. Fister dropped a few intriguing hints that Intel's design efforts for it were well under way. "We're pretty smart about the evolution to 64-bit, and we're street-smart about it," he said.
Mr. Fister also suggested that Intel might have already developed extensions to its 32-bit products that "we haven't told anyone about." But, he added, "it's hard for us to talk about unannounced entries."
Not far away, in Palo Alto, Hewlett-Packard may have even more riding on Itanium than does Intel. The chip is a big part of the company's goal to gain an edge over I.B.M., Sun Microsystems and Dell in corporate computing.
As a co-developer of the Itanium technology, Hewlett-Packard will get deep discounts on the price of each chip. That will give Hewlett a significant cost advantage over rivals.
In an interview last December, before shareholders approved Hewlett's purchase of Compaq, Richard A. Hackborn, a board member and a former senior executive, portrayed Itanium as a potentially crucial advantage for the combined company.
As part of its partnership with Intel, Hewlett was granted early access to chip designs and a deeper understanding of the technology, Mr. Hackborn said. So it will have a technical edge on other makers of Itanium-based servers, he argued, in addition to lower costs. That could make Hewlett the lead integrator of the Intel microprocessor and Microsoft operating systems in corporate data centers.
"That's a huge opportunity," Mr. Hackborn said. If Hewlett can exploit that opportunity, he added, "That puts the new H.P. on a comparable footing with Intel and Microsoft."
There are other benefits for Hewlett-Packard. The Itanium allows the company to eliminate both of its current 64-bit chips — the H.P. PA-RISC and Compaq Alpha. That alone should save the company $200 million to $400 million annually in development and manufacturing costs, according to Steven M. Milunovich, an analyst at Merrill Lynch.
Yet if Itanium fails, he said, "the real loss is the opportunity cost."
In the commercial market, Hewlett badly needs a credible strategy and a marketing message. Itanium, Mr. Milunovich said, is an essential part of the plan establishing Hewlett as the leading packager and integrator of Itanium-based systems.
"If everything works according to plan, H.P. could be best positioned to be the company to take PC economics into the enterprise," Mr. Milunovich said.
If Itanium fails, he added, Hewlett-Packard will be forced to go with Yamhill or AMD, and it will lose its hoped-for advantages in making large data-serving computers.
In the end, Itanium may be most vulnerable to a force that neither Intel nor Hewlett-Packard can control: the economy. Even if Itanium proves a technical success, the most powerful incentive for companies to shift to it lies in the high-performance computing power needed for ambitious new information technology projects. But in the sluggish economy, few companies are increasing capital spending.
"The real challenge to the Itanium may have less to do with marketing and design and more to do with a collapsing economy," said Michael Shulman, an analyst at ChangeWave, a research firm in Potomac, Md.
Mr. Shulman's firm regularly asks corporate information technology managers about spending plans. From last summer to this summer, he said, interest in the Itanium eroded sharply as spending on new computing projects was reined in.
"The common view is, `If it doesn't save us money we have no interest in it,' " Mr. Shulman said. "It's a very hard-nosed view."
