has decided to take a wait-and-see approach to Intel's second generation 64bit Itanium processor, Itanium 2, which launches today.

Intel says that the Itanium 2 is the first 64bit processor that can be used in multiples of 64 in a server. This ability puts it in the same league as Sun Sparc processors, currently used in some of IBM's high-end systems.

But despite its cutting-edge specification, Dell is still holding out to see whether its customers actually want this level of power. "Dell has made a decision to delay the launch of a next-generation IA-64 server until stronger customer demand materialises," said Sinead Murphy, a spokeswoman for Dell's UK and Ireland division.

Dell will monitor the market and "when a higher volume of customer demand exists, Dell will be ready with its next generation of Itanium-based products", Murphy said.

The company based its decision on a number of factors including the lack of "mature" 64bit operating systems and applications for the processor, Murphy said.

"Itanium-based servers today are primarily used in software development activities and consequently there are specific segments and interests in serving the market today to meet their current needs," Murphy said.

While HP has already announced a number of servers, workstations and software based around Itanium 2, Dell and IBM have both been slow in announcing their plans for the processor. Some analysts were already forecasting that Dell would not initially be making major Itanium 2 announcements.

"Dell stuck its toe in the water with Itanium 1 and it was not overwhelmed with the response from consumers. It comes as no surprise that Dell is saying that it'll wait and see as its business model would require products with Itanium 2 to be a viable market proposition very quickly. I don't see that happening until the third or even fourth generation of Itanium," said Andrew Butler, a vice president at Gartner.

Dell sees its current PowerEdge product line, based on the Intel Xeon processor, as continuing to provide the performance and value required by its customers, and the company's relationship with Intel remains strong, Murphy said.

Dell also has no plans exit the IA-64 market space, with the PowerEdge 7150 remaining in Dell's portfolio of PowerEdge servers, Murphy said.

According to Murphy, Dell has the flexibility to respond quickly if customer demand for products using Itanium 2 should change in the future.