SAN FRANCISCO - Hewlett-Packard on Monday rolled out an updated line of computer servers featuring Intel's new Nehalem Xeon microprocessor, touting their lower power use and higher performance to capitalize on customers' cost-cutting initiatives.

The sixth-generation of the company's ProLiant servers comes in 11 tower, rack and blade platforms -- different arrangements or physical set-ups -- in what the company calls its largest roll-out ever for the line.

It's HP's first refresh or update for the ProLiant line in three years and starting prices range from $999 to $2,105 apiece. X86 servers are low- to mid-range units based on standard industry components.

HP said the new ProLiant models draw half the power of the previous generation and feature a power capping function to better manage energy usage. In addition, a collection of sensors will track heat in the server and automatically adjust components such as cooling fans to increase efficiency.

The servers also house twice the memory and storage of the previous generation, the company said.

Paul Gottsegen, a marketing vice president for HP's industry standard servers, said companies are increasingly looking at energy usage to save costs.

We realized customers were looking at every dollar per watt so we turned over every rock within the engineering team to find out how we can help customers with power efficiency.

HP is the No. 1 maker of x86 servers, holding a roughly 38 percent market share, while second-place Dell holds a 22 percent share.

HP is No. 2 in the overall server market with a roughly 30 percent share, just behind rival IBM.

Intel is formally unveiling its Nehalem Xeon server processor on Monday and a number of companies are set to ship server products that include the chip, including Dell and IBM.

Gordon Haff, an analyst with Illuminata, said it's tougher for companies to differentiate themselves in x86 servers but thought HP's new lineup looked strong.

At some level everyone's products are more similar than they are different, but HP does have a lot of good features in here around power.

HP's new server announcement comes as the ground shifts in the enterprise market. IBM is in talks to acquire Sun Microsystems, sources say, in a deal that, if completed, would challenge HP in the high-end Unix server market.

At the same time, network equipment maker Cisco Systems Inc. has announced its entry into the server market.

Shares of Palo Alto, California-based HP fell more than 4 percent, or $1.44, to $31.90 in late afternoon trading, mirroring a decline of the broader market. (Reporting by Gabriel Madway; Editing Bernard Orr)

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