`Intel Inside' servers too

Chitra Phadnis

AFTER the famous ``Intel Inside'' campaign for desktops, Intel is now trying to get customers to peek inside servers too. The company is on a worldwide advertising binge, announcing its entry into the enterprise space via its 32-bit Xeon and 64-bit Itanium processors.

The multimillion-dollar print and online campaign for Xeon has four images reinforcing the same theme -- the difference between the normal and the really big. The first ad just released has a Jet Ski juxtaposed with a huge liner. Waiting in the wings are pictures of a pair of headphones and a wall of speakers, a personal telescope and an observatory, and a display screen in a hand-held device and in a packed stadium.

It is a move towards ``macroprocessing,'' -- the name given to the new ecosystem that includes open systems and leads to Internet-enabled business, the Internet, and the changes in business strategies which follow.

Targeting CIOs and MIS people, Intel plans to hold seminars for industry verticals -- it began with banks in June. One for the manufacturing sector is planned for September.

Macroprocessing involves front-end PCs, the middle-level application servers and also the back-end machines, bringing together the flexibility of the PC, the ubiquitousness of the Internet, and the massive processing capabilities of the mainframe.

With the scalable, 32-bit Xeon, and the 64-bit Itanium, all three levels can now run on Intel, says Prakash Bagri, Marketing Manager.

An Intel study in 2000 showed that only four per cent of the potential server base in 2005 was installed. ``The B2B Internet business is just starting to build as old-economy companies are getting Web-enabled. We see a growth in demand for servers happening there,'' says G.B. Kumar, General Manager, Business Development, Internet Solutions Group.

Macroprocessing is also seen as a step above proprietary systems which are more expensive -- not only in terms of the initial costs, but also because the customer has to depend on one vendor for technology innovation, according to a white paper on macroprocessing by the Aberdeen group.

``It is not clear that a campaign like this will work with a server buyer. Server buyers are a conservative group,'' says Rob Enderle, Research Fellow and Giga analyst. Decisions are usually based on peer reviews and seldom on ``high-concept campaigns'' such as macroprocessing, he says.

While the campaign itself might not have a big impact, the industry circumstances could help Intel win, he feels, with Compaq giving up on Alpha and IBM taking up Intel technology to target Sun, and Sun itself unlikely to be able to compete. ``Sun can't compete with the rate Intel improves a product once they have it out and so clearly are vulnerable to this attack over a long period of time.''

Intel is also tomtomming its cost advantage because it has volume economics on its side. Xeon offers a 30-40 per cent advantage on an average for price/performance, says Kumar.

But server buyers are a group that ``values reliability over almost everything'' and convincing them will take a long time. According to Enderle, volumes have to build up for Itanium, and this may take a couple of years.

``The market appears to be positioned to wait until the next release due out mid next year. Rivals too are unlikely to respond with price cuts until the next version of Itanium ships. And Intel is seldom on time, so it may not ship until 2003,'' he says.