HP Wants $4 Billion in Damages from Oracle Over Itanium Flap

Hewlett-Packard (NYSE: HPQ) and Oracle (NASDAQ: ORCL) return to court in two weeks for the next stage of their battle over which company suffered more in the Itanium enterprise server microprocessor flap, with HP set to argue that it’s due some $4 billion in damages and Oracle countering it lost $95 million in profits from HP’s dishonesty.

You may recall that in June 2011, HP sued Oracle for severing a contract to port a significant portion of its software to Itanium. Oracle, a top software supplier for the chip, countered that Itanium partners HP and Intel (NASDAQ: INTC) hid their plan to phase out the platform. A judge in the non-jury hearing subsequently ordered Oracle to resume porting, a ruling with which the software giant began complying last September but is appealing.

The upcoming trial is to determine if Oracle breached its contract with HP, or if HP deceived Oracle over its Itanium plans, and to set the amount of resulting damages for either company.

According to a report in InfoWorld, which attended the pretrial hearing, Jonathan Orszag, an economist with Compass Lexecon, an Oakland, Calif.-based consulting firm, will be called upon by HP to testify that Oracle’s decision to stop supporting Itanium injured HP’s enterprise server business.

“The Oracle conduct at question in this case had a very significant and negative effect on the HP Itanium business,” Orszag was quoted as saying at the hearing.

Ramsey Shehadeh, a consultant with New York-headquartered NERA Economic Consulting, expected to testify for Oracle, said at the hearing that had HP been more forthcoming about its plans for Itanium, Oracle could have landed some business with its own Sun-based SPARC/Solaris hardware that it did not achieve.

There is, of course, more than a trifling of irony to these proceedings. Intel, which launched the Itanium chip some 12 years ago as a RISC killer, in late January indicated that Kittson, its next iteration of Itanium, will be produced on a 32nm manufacturing process instead of the more advanced process as previously promised. A smaller nanometer manufacturing process would have accommodated more transistors, less power consumption and faster computing.

That move, along with Intel’s decision for Kittson to plug into the same socket as existing Itanium 9300 and 9500 chips rather than making it socket-compatible with Xeon server chips, raised some eyebrows about its long-term intentions for Itanium and immediately placed the future of HP’s Integrity servers at risk, so to speak.