Tech giant Hewlett-Packard ( HPQ) overhauled its server lineup Monday, unveiling a slew of new machines containing Intel's ( INTC) next-generation Nehalem chip.

The Intel Xeon 5500, announced Monday afternoon, is the server version of Intel's Nehalem processor, and forms the basis of H-P's latest assault on an increasingly tough market.

The 11 Nehalem-based products include blade servers, rack servers and tower servers, eight of which are completely new designs. H-P describes the launch as one of the biggest announcements to come out of its ProLiant server business, and is clearly gearing up for some intense competition.

The Palo Alto, Calif.-based firm gained a new rival recently with Cisco's entry into the blade server market, and it may also face a joint IBM ( IBM)/ Sun Microsystems ( JAVA) onslaught at some point in the near future.

H-P has so far avoided commenting on the possibility of IBM acquiring Sun but has been much more vocal about the threat posed by its long-time networking partner Cisco Systems ( CSCO).

At a time when users are struggling to justify their technology budgets, H-P is now looking to register on firms' radars thanks to the Nehalem silicon, which already features in desktops from Apple ( AAPL).

By using Intel's Xeon 5500 processors and its own Smart Array Controllers, H-P claims to offer twice the memory and storage of its previous generation ProLiant G5 servers. The company is also giving a song and dance about the G6 servers' power management capabilities, something that could resonate in power-hungry data centers.

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