Server Makers Wild About Intel's Nehalem

After months of hype, Intel officially took the wraps today off its new server chip, the Xeon 5500.

Known for months as Nehalem, it’s the first major upgrade to Intel’s high-volume x86 server architecture in about three years. It no wonder then, that server makers are salivating over the potential for a massive upgrade cycle.

Cisco recently announced it is joining IBM, Dell and others in selling servers as each tries to boost their share in the corporate datacenter market. Many are betting that Nehalem’s energy-efficiency, virtualization technology and speedy access to information stored in memory will entice spend-thrift companies to toss out their old servers and buy despite the economic belt-tightening.

The Xeon 5500 series boasts triple the memory bandwidth of previous chips and can dynamically adjust its clock speed to account for multiple workloads and demand conditions.

In a briefing March 27, HP executives suggested they will be able to widen their industry-leading share of the mainstream server market by delivering additional features and services on top of Intel’s own to the 11 new Nehalem systems of its ProLiant G6 line.

Among those is the “sea of sensors,” a catchy-named technology that automatically tracks thermal activity across the server through a collection of 32 smart sensors. The sensors dynamically adjust system components such as fans, memory and input/output processing to optimize system cooling and increase efficiency.

HP also is using its financial heft to offer financing with zero-percent loans in some countries and asset purchase-lease back plans.

Like others, HP says the low-hanging fruit will be companies that still are using single-core servers to process, send and retrieve data. Nehalem uses two processor cores to speed up those tasks. It’s actually a great selling feature for companies that want to consolidate their server systems and do more with less hardware.

Most analysts say the new Intel chips deliver everything the company promised, but they’re not sure whether Nehalem will immediately translate into a major upgrade cycle.

Analyst Doug Freedman at Broadpoint AmTech thinks it will. Last week, he upgraded Intel’s stock to buy, citing in part the launch of Nehalem. He set a $17 price target.

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