Company accelerates application availability, innovates on system design beyond the processor and virtualization solutions

HP today announced an investment of more than $3 billion over the next three years designed to vault Intel Itanium 2-based HP Integrity servers to the leadership position in the $20 billion market currently served by RISC processors.

Building on strong Integrity server sales momentum, this investment will span research and development, server and system software design, partner-led application solutions, and sales and marketing.

In related news today, Intel Corporation reached agreement with HP to hire HP's Intel® Itanium® processor design team based in Ft. Collins, Colo., strengthening its investment in the Itanium architecture and bolstering the development of multi-core, multi-threaded processors.

This agreement is designed to accelerate broader industry adoption of the Itanium architecture in Intel's target markets of RISC replacement, high-performance technical computing and mainframe replacement. More information regarding this announcement is available in a news release at http://www.intel.com/pressroom .

HP expects that Itanium-based Integrity server unit sales will grow to more than half of HP's Business Critical Server unit sales by the end of calendar year 2005 and to 70 percent by the end of 2006.

"As HP and Intel continue to invest in server innovation and Itanium, Integrity servers become a 'must have' competitive weapon to drive customer value for the next decade and beyond," said Carly Fiorina, HP chairman and chief executive officer. "Together with Intel, we are driving Itanium and Integrity servers as the premier server platform for customers' most demanding workloads."

"With today's significant investment announcement from key partners HP and Intel, customers can count on Microsoft's continued leadership delivering solutions based on Windows Server 2003 and SQL Server for Itanium 2-based HP Integrity servers," said Steve Ballmer, chief executive officer, Microsoft Corporation. "Microsoft has been working closely with HP and Intel on a range of industry-leading solutions that offer compelling value to our customers who require the highest levels of scalability for their mission-critical high-end business applications and database solutions."

"HP Integrity servers running Microsoft Windows are meeting our business intelligence needs. We are now reaping the benefits of a 30 to over 100 percent performance improvement that enables us to make better business decisions faster and also gives us the headroom to sustain our 8 percent annual growth rate," said Dave Geiver, vice president of technology, PREMIER Bankcard. "Not only did HP offer an exceptional systems and support solution with the business intelligence applications we needed, but also HP's responsive, knowledgeable staff helped get us up and running quickly. It is clear that HP really cares about our success."

Broader partner-led solutions

HP's plans include co-investing with Intel to broaden the independent software vendor (ISV) application portfolio for Integrity servers and to expand ISV go-to-market programs. The application ecosystem stands at more than 2,900 applications today and is expected to grow to more than 4,500 during 2005.

"We have built a strong foundation for Integrity servers with the leading partner applications and solution infrastructure in place. We are now increasing our focus on delivering the complete application environments required by our customers in key target markets spanning telecommunications, financial services, government, healthcare and manufacturing," said Rich Marcello, senior vice president and general manager, Business Critical Servers, HP.

Investment in server and system software design

Today, the broad range of HP Integrity servers offers superior price/performance over RISC-based competitors. With the increased investment, HP's design innovation in chipsets and systems engineering continues to focus on value-add beyond the microprocessor to deliver the leading performance, scalability and reliability in the industry.

HP's server design innovation includes work across the breadth of the Integrity server line, with expanded focus on growth in the highly competitive two- to four-processor server market. Current development work is underway to deliver leading price/performance and customer value for UNIX®, Windows®, Linux and OpenVMS customers in this market segment. In addition, HP plans to introduce Itanium-based NonStop servers in 2005.

As the only vendor to offer customers a choice of four operating environments on a single platform, HP continues to make significant investments in system software for mission-critical environments. As the market leader in UNIX systems, HP is aggressively driving innovation in HP-UX 11i, with particular emphasis on enhancing the virtualization, high-availability and disaster-tolerance capabilities of its enterprise UNIX operating system. For Windows Server 2003 and SQL Server, HP continues close technical collaboration with Microsoft to provide a trusted and scalable platform rivaling today's RISC servers. In addition, HP has established a dedicated engineering team to optimize Linux on Integrity servers.

Next month, the production release of OpenVMS is expected to be widely available for Integrity servers. With OpenVMS on Integrity servers, the base of HP AlphaServer system customers running OpenVMS - across telecommunications, stock exchanges, government agencies and defense markets - will have a powerful enterprise platform for their solutions and a long-term growth path.

HP's virtualization technologies are a cornerstone of its Integrity server leadership strategy. For example, HP expects to deliver virtual machines for HP Integrity servers in the second half of 2005, enabling customers to run multiple virtual servers on a single Itanium processor, optimizing server utilization. As previously announced, HP is enhancing its HP Virtual Server Environment by providing common management for scale up and scale out virtualization in multi-OS environments.

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