In what way did Itanium not work out? It isn't in every PC sold, but it was never intended to be. It was intended to replace Sparc/power/alpha. While they didn't get Sun or IBM on board, they did get HP, and the chip is profitable. It's not going to drive the future of the company, but it's not like they didn't make money on the investment... it turned it's first profit 7 years ago and has been making money for them since.
No, it was intended to be the "Big Iron" CPU replacement. They never had any intention of bringing it to the desktop which is why they delayed as long as they did in x64. They wanted 64-bit to be a long-term differentiator between server class and desktop class CPUs. Hence the forecast being Servers sold a year...
