Intel bets on Woodcrest Chip

Stung by sinking profits in recent quarters, Intel announced two strategic moves this week, launching the dual-core Xeon Processor 5100 series server chip and selling off its sluggish line of communication chips.

Having already lowered his 2006 profit forecast, Intel CEO Paul Otellini will be happy to pocket $600 million from selling the XScale technology, which powers chips for smart phones, to the Marvell Technology Group. Woodcrest’s success, however, is less bankable.

The new Xeon chip, code-named “Woodcrest” got off to a strong start last week when Intel announced that customers could take delivery of Woodcrest-enabled servers from Dell, Hewlett-Packard, and IBM by the third quarter. But the company has a lot of ground to make up from rival Advanced Micro Devices, which has consistently used its dual-core Opteron chip to help enterprise IT managers reduce power bills.

As blade and rack servers become denser and processors get faster, electricity costs and room temperatures in datacenters are soaring, said Jed Scaramella, an analyst with IDC.

“You can always add more power to your datacenter, but cooling is the limiting factor,” Scaramella said.

Woodcrest could help solve that problem with support for virtualization that means higher utilization rates for each server, and better thermal design that increases density and reduces server sprawl, Scaramella said.

Yet those improvements merely make the new Xeons competitive with AMD, said Steve Kleynhans, an analyst at Gartner. Thankfully for Intel, however, Woodcrest has succeeded in tests of computational performance and power per watt.

“Intel has regained the high ground on both raw performance and performance per watt … at least with two-way systems,” Kleynhans said.