HP Paying Intel To Prop Up Itanium, Says Oracle

Oracle officials have alleged that Intel is only keeping its controversial high-end Itanium chip alive because Hewlett-Packard is paying it to do so.

In a court filing 18 November, Oracle executives say that HP is “secretly” paying Intel to continue development of the Itanium platform so that HP can keep using the chip in its high-end servers and protect the money it makes from its HP-UX operating system.

HP is by far the largest user of Itanium processors.

Weekend At Bernie’s

The filing is part of a larger lawsuit filed by HP after Oracle in March announced it would no longer develop software products for the Itanium platform, alleging that Intel intends to kill off the processor in favor of its more popular Xeon chips. HP officials claim that Oracle’s decision violates an agreement between the two vendors that they would support products that are used by their mutual customers.

In the court filing – in which Oracle officials are asking the court to push back the scheduled trial date of 27 February, 2012 – the software giant claims that despite HP statements, Intel has decided on its own to continue to develop the Itanium platform. Intel officials say their current roadmap calls for new Itanium chips through the rest of the decade. However, documents indicate that the real motivation for Intel’s Itanium roadmap are payments from HP, and that a secret contract between Intel and HP guarantees development of the Itanium chip through at least the next two generations. Without those payments, Intel would kill off Itanium, according to Oracle.

“Intel’s independent business judgement would have killed off Itanium years ago,” Oracle officials say in the court document, found on the AllThingsD website. “But HP has secretly contracted with Intel to keep churning out Itaniums so that HP can maintain the appearance that a dead microprocessor is still alive. The whole thing is a remake of Weekend at Bernie’s.”

Bitter Lawsuit

Both HP and Oracle are claiming that each other’s stance on Itanium is little more than a cynical ruse designed to damage the other’s business, with their joint customers being used for leverage. HP officials have accused Oracle of dropping Itanium to prop up its own SPARC/Solaris business, which the software maker inherited when it bought Sun Microsystems last year. Oracle and HP share about 140,000 customers, with many of them running their Oracle databases and other enterprise software on HP’s high-end Itanium-based Integrity systems. By dropping Itanium support, Oracle is forcing those customers to choose between HP’s hardware or Oracle’s, according to HP officials.

However, Oracle executives are claiming that HP is paying Intel to keep the Itanium platform afloat to preserve the money the OEM reaps from its HP-UX OS.

“A large portion of HP’s overall profit comes from the service and support of computer servers that run the HP-UX operating system,” Oracle claims in the court filing. “HP achieves a far lower ‘attach rate’ (meaning it gets few service contracts) on the operating systems like Linux that are prevalent on servers running x86 microprocessors. Thus when customers migrate to new platforms, HP loses the service contract. This is a multi-billion problem for HP.”

In addition, by continue to offer high-end systems powered by Itanium, HP is able to remain competitive with IBM and Oracle, according to Oracle.

When Oracle officials first announced their plans to ditch software development for Itanium, they claimed that Intel engineers said the chip maker’s plan was to quickly phase out Itanium in favour of the Xeon platform, which continues to grow in strength and performance. Intel officials denied plans to end Itanium development any time soon, and executives from both Intel and HP say the Itanium platform gives businesses greater choice in operating systems and platforms.

Intel executives say the next generation of Itanium – dubbed “Poulson” – is due out next year, and that it will form the basis of the platform’s roadmap through the end of the decade.

HP users have urged Oracle to reconsider its decision, saying the prospect of having to move to a new hardware platform or a new database is onerous. They also criticised the two vendors for not being able to come to a resolution.

Oracle and HP have been longtime partners, but Oracle’s acquisition of Sun – and the SPARC/Solaris platform – put it into direct competition with HP. The two companies also clashed over Mark Hurd, who in August 2010 was forced to resign as HP’s CEO over questions about his business and personal conduct. Oracle CEO Larry Ellison publicly criticised the HP board of directors for letting Hurd go, and soon after hired Hurd as president of Oracle. That led to a brief legal skirmish between the two vendors.