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Intel Corp. plans to create a smaller core, add new power management features and reduce the price of its 64-bit Itanium processor. But the 4-year-old chip could still fail to meet earlier projections for its uptake by customers due to competition and a less robust server market than previously forecast.

New technologies such as common chip sets and smaller cores will work to bring prices in line with Intel’s 32-bit Xeon chips within the next few years, said Mike Fister, senior vice president and general manager of Intel’s Enterprise Platforms Group, during a conference call last week.

In addition, new capabilities will enable the processor to manage power consumption. For example, technologies rolling out over the next two years will enable Intel users to define power thresholds and will allow IT administrators to manage consumption remotely.

In addition, Intel last week released its IA-32 Emulation Layer software to enable Itanium servers to better run 32-bit Windows applications. The software will be followed later this year by a version for Red Hat Inc.’s Red Hat Linux operating system.

Rival Advanced Micro Devices Inc., of Sunnyvale, Calif., touts its Opteron chip’s ability to run both 32-bit and 64-bit x86 applications equally well. While AMD currently positions the Opteron against the Xeon, it eventually will find itself competing more directly with the Itanium.

Competition from Opteron and other architectures will be a key challenge to the Itanium over the next few years, according to analysts at IDC. The Framingham, Mass., research company last week bumped up its outlook for the Itanium chip this year to $1.6 billion but downgraded projections for 2007 from $8.7 billion to $7.5 billion because of declining server sales.

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