March 30, 2009

Intel's Nehalem-architecture chips will now try to make their mark in servers, after debuting in desktops last November.

On Monday, Intel is rolling out new Nehalem-based Xeon models targeted at servers using up to two processors. Nehalem offers some important firsts for Intel, including an integrated memory controller for better performance, hyper-threading for up to 16 virtual cores (which improves multitasking), and Turbo Boost Technology, which dynamically increases the processor's frequency (speed), as needed.

The announcement will be anticlimactic to some extent. Apple has already announced a new Mac Pro using the Nehalem Xeon 3500 and 5500 processors and last month Intel discussed how Nehalem will be used in new "Willowbrook" servers in mega data centers.

But fresh announcements are due on Monday from the largest server suppliers in the world, including IBM. "If you thoroughly maximize the capabilities of Nehalem, generation to generation you can get something like two times the performance capability," said Alex Yost, vice president IBM BladeCenter. "We did install a bunch of early systems at key clients on Wall Street and I am very encouraged," he said. IBM is the largest server supplier in the world based on revenue, holding about a 33 percent share of the market, according to Gartner.

DreamWorks has also been a high-profile early adopter of Nehalem. Prior to Nehalem, DreamWorks had to wait overnight to get a animation rendering project completed but this can be done almost in real time with the new processor, according to Intel and DreamWorks.

Analysts don't expect Nehalem to cause seismic shifts in chip market share because Intel processors already claim a disproportionate chunk of the server market. "We expect only an incremental upside on a unit basis," said Ashok Kumar, an analyst at investment bank Collins Stewart. More importantly, Kumar is closely watching Cisco's entry into the server market. "If the Cisco relationship opens up new market opportunities, that's where the upside will be."

The new Xeon 5500-based servers from IBM deliver lower wattage requirements that can slash energy costs up to 50 percent, according to a company statement. The IBM servers also support more memory, storage, and I/IO (input-output) for cloud-computing customers.