Monday, Intel will officially launch it's most important chip in more than 15 years, a high performance Xeon server microprocessor built using its advanced Nehalem design. It has the potential to shakeup not only the microprocessor market for IT systems but also trigger a tsunami of data center upgrades worldwide.

The reason is its exceptional performance and a design that significantly reduces power consumption. On Monday, Intel and customers such as Hewlett-Packard, Sun Microsystems, IBM, Dell, Cisco Systems, and others, will release benchmarks that are expected to show dramatic performance improvement across a broad range of business applications.

"With one Nehalem server customers will be able to replace nine servers. And that's before using virtualization, with which you'll be able to replace as many as 18 servers, and reduce power consumption by abut 20 percent," said Kirk Skaugen, VP and General Manager of Intel's Server Platforms Group.

Nehalem has been in development for four years and is manufactured on Intel's most advanced 45nm chip technology. This dramatically speeds up performance and reduces energy use because electrons have shorter distances to travel and there is less leakage of power.

"When I joined Intel in 1992, the fastest supercomputer performed at 93 gigaflops and cost $130 million. One Nehalem server will give you the same performance," said Mr Skaugen.

This combination of high performance and support for critical IT technologies such as virtualization, means data centers will be able to reap massive cost savings by consolidating the number of servers in their data centers. This means lower administration costs, and big savings on power consumption -- two of the largest issues facing data center managers.

Mr Skaugen said that a Nehalem server will pay for itself within just eight months. "After 8 months they become cash machines," said Mr Skaugen.

With these types of dramatic cost savings, and the extraordinary economic pressure on data centers to reduce operational costs because of the recession, Nehalem servers could trigger the largest upgrade cycle ever seen in IT systems worldwide.

The exceptional performance of Nehalem systems could also trigger a consolidation of the microprocessor market for IT systems, which includes server chips from Sun Microsystems with its SPARC, and IBM's POWER microprocessors. This RISC market has been in Intel's cross-hairs for more than a decade but now it holds a strong hand of cards, including the availability of Sun's Solaris operating system on Xeon, which will make migration from RISC systems easier.

The Itanium microprocessor, introduced with much fanfare in 2001, was Intel's first attempt to take on the lucrative RISC microprocessor market. Although Itanium failed to meet its high expectations, Intel's Xeon server chips based on the PC X86 architecture succeeded in dominating the low end of the IT systems market.

However, nearly half of the installed server market is still RISC microprocessor based, valued at about $27 billion, said Mr Skaugen. For the first time, Intel's customers can build IT systems that are highly competitive with RISC based IT systems on performance and total cost of ownership.

In addition, the quad-core design of Nehalem means that single core Xeon servers are also ripe for replacement.

That means there are tens of billions of dollars in business opportunities opened up by Nehalem based servers in replacing aging IT systems worldwide. This will essentially lead to the complete rebuilding of global IT resources and the Internet itself. And it will potentially spark a reordering of the IT vendors as new entrants into the server market such as Cisco Systems, and low cost computer makers such as Dell, move to establish significant market shares.

Sun Microsystems is especially vulnerable. Its SPARC microprocessor has a good track record for performance and low power use but Sun must maintain large investments in keeping it competitive. That scale of investment is increasingly challenging for Sun especially with the competition from Nehalem. This is very likely the reason Sun has been seeking to be acquired.

If IBM were to buy Sun the RISC microprocessor market could be consolidated into a single architecture and development could be concentrated into producing POWER based IT systems that could potentially maintain a performance and cost of ownership competitive with Intel's Xeon server microprocessors.

[Intel is a sponsor of SVW]

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Please see:

Sighting Nehalem and Dawn in the Wild - Bits Blog - NYTimes.com

Nehalem servers to anchor Intel cloud computing | Nanotech - The Circuits Blog - CNET News

Intel Nehalem (microarchitecture) - Wikipedia

What you need to know about Intel's Nehalem CPU - Ars Technica