The cost structure was just bonkers. I replaced a big file server environment that was like $2M of Sun gear with like $600k of HP Proliant.
The real thing that killed the division is Oracle announcing that they would no longer support IA-64. It just so happened that like 90% of the clients using Itanium were using it for oracle DBs.
But by that point HP was already trying to get people to transition to more traditional x86 servers that they were selling.
You had AutoCAD, you had 3D Studio Max, you had After Effects, you had Adobe Premiere. And it was solid stuff - maybe not best-in-class, but good enough, and the price was right.
Linux didn't "win" nearly as much as x86 did by becoming "good enough" - Linux just happened to be around to capitalize on that victory.
The writing on the wall was the decreasing prices and increasing capability of consumer-grade hardware. Then real game-changer followed: horizontal scalability.