17 December 2004 Computer giant Hewlett-Packard and processor maker Intel have ended their costly 10 year partnership to develop Itanium chips for server computers, following lacklustre sales.

The companies have confirmed that HP’s Itanium team will transfer to Intel, as the two dissolve a ten-year partnership that was intended to build the 64-bit chip of the future.

Both companies have reaffirmed their commitment to the Itanium chip technology. HP has pledged $3 billion over the next three years to continue its push of Itanium based servers into the high-end server market. Meanwhile, Intel will continue with the design and development of the microprocessor chip.

To date, sales of the Itanium chip have been disappointing. This is partly because of a lack of applications written specifically for 64-bit architectures. Intel has reacted to this by adding 64-bit extensions to its Xeon range of servers, but was beaten to the punch by rival AMD. Its Althon64 and Opteron processors are both able to run 32- and 64-bit applications.

The relationship between HP and Intel may ultimately have discouraged other computer makers from using the chip. Although HP argued it provided a competitive edge over its rivals in the server market, HP business-critical systems manager Rich Marcello said: “We were actually too close. This will level the playing field.”