HP Brings Out Servers With Intel Itanium 2 Processor

Hewlett-Packard Co. launched a line of high-end server and workstation computers Monday that will be among the first products to have Intel Corp.’s Itanium 2 processor.

HP, which recently merged with Compaq Computer Corp., commands nearly one-third of the $50-billion global market for servers, powerful computers capable of running Web sites and managing e-commerce transactions. The Palo Alto-based company is the largest seller of servers, followed by IBM Corp. with a 23% share and Sun Microsystems Inc. with 15%, according to market research firm IDC.

The new HP servers aim at the high end of the market, where volume is lower but profit margins are wider. About 20 companies will introduce servers in the next few months based on Itanium 2, arguably Intel’s most critical product launch of the year.

The Santa Clara chip company, which dominates the low- to mid-priced server market but is weak in the high-end server market, launched its first Itanium product last year to address this gap. But sales were disappointing, partly because of the chip’s low performance. This year’s chip is expected to be twice as fast.

Demand for servers has slowed because of general economic malaise and a reluctance by companies to buy costly computers. In the first three months of this year, server sales dropped 20%, to $13.4 billion, while volume remained flat at just over 1 million servers shipped, compared with the same period last year, according to IDC. HP has been able to maintain its market during that time, said Mark Hudson, HP’s worldwide marketing manager for servers and workstations.