With the launch of 64-bit Xeons, server strategies based on Itanium and Opteron are put into a new light, if not called directly into question.

In referring to the 64-bit extensions, which were reportedly developed under the code name Yamhill, CEO Craig Barrett called the extended Xeon probably the worst kept secret in Silicon Valley history.

It is easy to laugh about this, but Yamhill is serious business, and the fact that rival Advanced Micro Devices had garnered two tier one server suppliers with its 32/64-bit Opteron processors and looked as if it was just about ready to close the endorsement of Hewlett-Packard Co, seemed to have forced Intel’s hand.

Intel would have undoubtedly preferred that the industry would have wholly supported its 64-bit Itanium alternative after investing a decade and billions of dollars in that product line.

Barrett’s statement to the press focused on the increasing digitalization of the world and Intel’s position as a key supplier of circuits that power the convergence of computers, communications, and content.

Lots of new capabilities will be coming for Itanium, he said, including dual and multiple core implementations, chip multithreading, improvements in cache memory reliability, PCI Express I/O, and better power management features that allow the Itanium processors to run at a cooler temperature.

In 2001, Morgan Stanley began a project to migrate away from its RISC/Unix back end database and risk arbitration systems to X86 servers running Red Hat Linux.

The company said that over the course of the past four years, when this migration was taking place, it had quadrupled its trading volume to 1 million trades a day, but the amount of fees it could extract from each trade had fallen by a stunning 80%.

The only way to stay in business was to radically cut the cost of each transaction. And while 32-bit Xeon servers offer low prices, Itanium, not Xeon, provided the best performance and, ultimately, the best bang for the buck.

According to Jeff Birnbaum, CIO at the company, on the risk assessment financial applications it runs, the Itanium outperformed the fastest Xeons by a factor of 2.5 times.

On database applications, where main memory makes a big difference in performance, the Itaniums could outpace the Xeons on a chip-for-chip basis by a factor of 3 to 10 times running Morgan Stanley’s actual code.

This, of course, begs the question of how the 64-bit support in Xeon will change the cost/benefit analysis at the thousands of companies like Morgan Stanley who have already adopted Itanium as well as at the many millions of companies who have not yet bought 64-bit servers but who will in the coming years.

It is hard to fathom how much the expanded memory means to the performance of entry and midrange systems, but it is critical for any enterprise class system.

This article is based on material originally published by ComputerWire