HP Calls Oracle Itanium Move ‘Shameless Gambit’ to Hurt Competition

Oracle Corp. (ORCL)’s plan to drop support for a server chip made by Intel Corp. (INTC) is a “shameless gambit” that jeopardizes customers and will cost hundreds of millions of dollars in lost productivity, Hewlett-Packard Co. (HPQ) said.

Oracle said yesterday that it will stop developing software for Itanium-based servers because the processor is “nearing the end of its life.” Intel denied that assertion, saying it will continue to produce Itanium and has plans for future versions.

The move rankled Hewlett-Packard, the biggest producer of server computers that use Itanium, in part because Oracle now competes in the server market. Through the acquisition of Sun Microsystems last year, Oracle gained a lineup of servers that run an Itanium rival called Sparc. By pulling the plug on Itanium software support, Oracle is undermining competition in the market, Hewlett-Packard said today in a statement.

“We are shocked that Oracle would put enterprises and governments at risk while costing them hundreds of millions of dollars in lost productivity in a shameless gambit to limit fair competition,” Dave Donatelli, executive vice president of Palo Alto, California-based Hewlett-Packard, said in the statement.

Oracle is the largest maker of database software and other corporate applications, and its programs are used on Itanium servers, which typically handle heavy-duty computing tasks. The chip was initially developed jointly by Intel and Hewlett- Packard. Oracle said it will continue to support its existing Itanium customers.

‘Disinformation’

Oracle is taking shots at Itanium because Hewlett-Packard systems based on the processor are winning orders, while Sparc- based servers are losing market share, Hewlett-Packard said.

“This latest Oracle action of disinformation is clearly an attempt to force customers into purchasing Sun servers in a desperate move to slow their declining market share,” Hewlett- Packard said.

Oracle said the opposite is true. It maintains -- despite Intel’s denial -- that Hewlett-Packard knows that Intel plans to shift away from Itanium.

“HP is knowingly withholding this information from our joint Itanium customers,” the software maker said in a statement. “Oracle has an obligation to give our customers adequate advanced notice when Oracle discontinues development on any software product or hardware platform so our customers have the information they need to plan and manage their businesses.”

Hurd’s Ouster

The dispute escalates a corporate feud between the two companies. Tensions flared last year when Hewlett-Packard ousted Chief Executive Officer Mark Hurd, following an investigation that found his expense reports concealed a personal relationship with a marketing contractor. Oracle CEO Larry Ellison said Hurd was treated unfairly and later hired him to be co-president of his company.

Oracle and Hewlett-Packard are increasingly encroaching on each other’s turf. While Oracle has pushed into servers, Hewlett-Packard is bolstering its software business. Both are going after the burgeoning market for data centers -- large rooms of servers that deliver software and information globally.

Intel, the world’s largest chipmaker, said Itanium development remains on track.

“Work on Intel Itanium processors and platforms continues unabated with multiple generations of chips currently in development and on schedule,” Paul Otellini, CEO of the Santa Clara, California-based company, said today on Intel’s website. “We remain firmly committed to delivering a competitive, multigenerational road map.”

Itanium has never reached Intel’s initial sales targets because of development delays and slow adoption by computer makers. The majority of servers rely on a line of chips called Xeon that was adapted from personal-computer processors. Both Hewlett-Packard and Oracle make servers that run on Xeon, as well as other chips.

Intel rose 15 cents to $20.29 today in Nasdaq Stock Market trading. Shares of Redwood City, California-based Oracle climbed 29 cents to $31.41, while Hewlett-Packard advanced 33 cents to $42.07 on the New York Stock Exchange.

To contact the reporter on this story: Ian King in San Francisco at ianking@bloomberg.net

To contact the editor responsible for this story: Tom Giles at tgiles@bloomberg.net

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