Troubled by its underperforming storage and server systems business, HP plans this week to unveil new server virtualization capabilities and an updated Unix operating system that it says will boost performance and make it easier for users to move to its Intel Itanium line of servers.

HP plans to use its HP World user conference in Chicago to highlight the new technologies, which bring Unix virtualization and management features to its Itanium servers. HP has announced plans to phase out its PA-Risc and Alpha servers and standardize on the Intel platform.

The server news comes a week after HP announced its third-quarter results showing increased revenue but disappointing performance in its Enterprise Servers and Storage Group. Chairman and CEO Carly Fiorina estimated that issues affecting the servers and storage group cost the company $400 million in revenue and $275 million in operating profit.

Fiorina said three issues have dogged the server and storage group during the quarter: a less-than-smooth migration to a new order and supply-chain management system in the U.S., aggressive discounting and poor channel management in Europe, and significantly lower-than-expected storage revenue.

Several sales executives were let go as a result, including former server group chief Peter Blackmore, who was executive vice president of HP's Customer Solutions Group.

HP intends to invigorate its server business this week with announcements including updates to HP-UX is support for PA-Risc-based HP 9000 servers, meaning that a single operating system can run across both the HP 9000 and Integrity servers. In addition to providing an improvement in performance of up to 25% for users upgrading from HP-UX 11i Version 1, the updated operating system will enable common administration across HP 9000 and Integrity servers, and will maintain source and data compatibility when moving to the Itanium systems.

Further, HP's high-availability software, Serviceguard, running on HP-UX 11i Version 2 will let users group HP 9000 and Integrity servers into one cluster.

"HP is moving towards parity with the Integrity line and the PA-Risc line," says Jonathan Eunice, president and principal analyst at Illuminata. "They're in this transitional period between the two platforms, and [the update brings] 97% or 98% equivalency so essentially all the important things you'll need to migrate between the machines will be there."