lb, Re: Intel doesn't earn any profits (other than foundry profits) on chips destined for HP (70% of the market).
In order for HP to get such a generous agreement, they would have had to have put significant resources towards development. Nothing comes for free, and there's no way that HP could get any IPF CPU at cost for the lifetime of the architecture, just because they played a part in defining the instruction set.
It would actually work out quite well in Intel's favor if HP took care of the cost of design, since fixed costs are harder to recover. In fact, Intel would make money on every CPU that they didn't sell to HP, while HP is left with the burden of selling enough volumes to repay the design costs.
It seems so much more likely to me that HP's involvement in the Itanium design cycle is waning, and along with that, the size of the discount they get from Intel. I seriously doubt they are getting CPUs at cost by this point, though it's anyone's guess how large the discount actually is.
Re: If IPF ever really started to threaten Power, IBM would likely pull the plug on it (why would they risk a multi-billion investment to "endorse" a rival that generates 1,100+ server sales per quarter).
Intel and IBM have a love/hate relationship, as always. IPF is sure to cannibalize their proprietary lines, but at the same time, it acts as a great hedge for the 4- to 16-way space. It's in the interests of IBM's business model to endorse all architectures and make money through their Global Services division. They can actually sell hardware at a loss under this business model.
Re: Intel is currently earning profits on chips going into 1856+ servers per quarter. At 8 chips per server (chip guy estimate from a while ago) and an average chip price of $1,400 (pricewatch), Intel is generating all of $83+ million per year in total IPF sales. If they lost IBM, they would be down to $33 million in total IPF sales per year.
This is total revenue for IPF before cost of goods sold is taken into account and overhead for on going development. How long can they keep investing?
See the answer to your first comment above. You first assume that HP gets CPUs at cost, and here you assume that Intel has the burden of development costs. Ridiculous, these wouldn't both be true. Somehow, and in some way, HP and Intel have an agreement whereby they are getting near equal returns for their investment into IPF. Keep in mind that HP's long term goal was not to be a CPU design house, so it's likely that they are no longer putting up significant resources for the development cycle. We can therefore assume that their CPU discount has dwindled.
Re: Dell doesn't want IPF to succeed as they will forever be at a competitive disadvantage to HP, their largest competitor.
Wrong. Dell's business model is to follow their competitors into the markets that they have already blazed, and then beat them by driving high volumes without the burden of R&D overhead. That's why Dell will sell systems based on chipsets and platforms that Intel has already designed. HP will certainly have an advantage when it comes to customers requiring a full hardware and software solutions stack, but for the high volume market, Dell will always win. I think this will become more apparent going forward.
News 
Market Data 
Discover 
AI
