SUNNYVALE, CALIF. - Advanced Micro Devices this week is set to unveil its Opteron chip, which the company says will make it easier for businesses to transition to more-powerful 64-bit servers that can support increasingly demanding applications.

The twist with the Opteron is that it uses the x86 instruction set with 64-bit extensions, meaning it can run 32- and 64-bit applications simultaneously. That's good news for corporate customers that might have been reluctant to make the move to 64-bit computing because of the need to recompile existing 32-bit applications.

"We don't expect people to throw away their huge investments in 32-bit computing," says Marty Seyer, vice president of AMD's server business.

That contrasts with Intel's 64-bit Itanium, which Intel says runs 32-bit applications but with performance degradation. The focus behind Itanium, however, has been on providing a reliable, secure and scalable alternative to 64-bit RISC processors, says Mark Hudson, vice president of marketing for business-critical systems at HP, which helped develop Itanium.

For its part, HP remains committed to Itanium and last week announced growing independent software vendor and customer support for its Itanium products.

"We're light years ahead as far as getting an ecosystem built around Itanium. For Opteron, they haven't even started," Hudson says.

AMD concedes that Opteron will not compete with Itanium, initially at least, but rather is an alternative migration path for businesses considering a move to 64-bit computing.

"They're competing in the one-way, two-way Xeon space where they think customers who may find a need for 64-bit computing will be able to do so easily, first using their 32-bit capabilities and then moving up into the 64-bit realm," says Vernon Turner, group vice president of IDC's Global Enterprise Server Solutions. "They're providing . . . 32-bit and 64-bit capabilities at industry-standard prices."

The two-way Opteron processor will be available this week while the one-way and eight-way processors will ship later in the second quarter with prices for both on par with Intel's 32-bit Xeon processor, Seyer says. IBM's two-way Xeon-based xSeries 235 starts about $1,800.

AMD's entry into 64-bit computing won't be easy. Analysts and users note that while AMD is entering the market with a competitive approach, it still must garner the support of a Tier 1 systems vendor such as IBM or HP to really make headway in the enterprise market. In the x86 market, AMD accounts for just 2% or 3% of shipment revenues, according to IDC. Intel accounts for the rest.