HP has released two new servers featuring Intel's new dual-core Itanium chip.

HP's Integrity rx3660 server costs $10,531, and the rx6600 starts at $14,771. Both feature Intel's Itanium 2 "Montecito" processor introduced in July. HP is also offering a Montecito upgrade throughout its existing Integrity line.

Intel hopes that Montecito will improve Itanium's competitive position against IBM's Power 5 chip architecture and Sun's SPARC. It also remains to be seen how many server vendors beyond HP will embrace Itanium. "I would describe this as a marathon," said HP marketing manager Don Jenkins. "It takes a long time to establish a new architecture in the market. It took IBM a long time to establish Power."

HP introduced its first Itanium server in 2001. But by the end of 2005, servers based on the processor accounted for less than one percent of the market, based on units shipped, according to research firm Gartner, and 85 percent of them were sold by HP.

European product manager Ken Surplice said: "We would love to have more people in the eco-system. Yes, we'd like to recoup the investment but, as we move to outsourcing chip supply, it's affordable because we don't have to spend on chip development."

But by another measure, Itanium is growing. Today, close to 9,000 software applications run on Itanium, said Jenkins, up from about 100 in 2003, which gives Integrity broader appeal to enterprise customers. "Customers can't use the server until they have the applications and the application vendors don't want to invest in the applications on that chip until they see the demand for it," he said.

Several important software vendors also announced Thursday their support of Integrity running Montecito, including BEA Systems, RSA Security and Comverse Technology. "HP has been steadily adding to the Itanium portfolio," said Gordon Haff, an analyst at Illuminata.

But few other server vendors are following HP's support of Itanium, Haff added. Fujitsu announced in August it will introduce a server running Montecito, as did Silicon Graphics but, he said, they are "small players" relative to vendors like Dell, Sun and IBM, which are not using Itanium. Still, Haff said, Montecito "is a nice upgrade to the Itanium."

Integrity is HP's high-end server for business-critical applications. Montecito is the first Itanium design to offer hyperthreading, virtualisation and multiple cores, which increase Integrity's performance.

The Integrity rx6600 running Montecito performs close to 350,000 transactions per minute (tmp) - more than twice the 161,000 tmp of an Integrity running an older version of Itanium - according to tests by the independent Transaction Processing Performance Council. Montecito is also more cost-efficient, operating at $2.24 per transaction minute, versus $3.94 on a previous Itanium chip.

But scepticism remains. "$2.24 is good but they're still not the most powerful system," said John Clabby, president of the IT research firm Clabby Analytics. "Montecito is an improvement, but it's not a leader and that's what Itanium was supposed to be."

The fastest processor tested by TPC is an IBM Power 5, which topped four million transactions per minute with a cost per minute of $2.97, noted Clabby. HP's Jenkins downplayed the significance of IBM's performance numbers, noting that most enterprises only need servers that can perform 150,000 to 300,000 transactions per minute.

"Four million is a benchmark that doesn't have any relevance other than bragging rights," Jenkins said.