Itanium was absolutely a plan to take out the competitors in the unix- and minicomputer market, where margins were much, much higher than in the generic x86 market. That worked. SGI, Digital, HP, Compaq/Tandem, they all fell.
It was not necessarily the plan to abandon the architecture, but once it was won, it also wasn't terribly important to keep going. Much like most corporate takeovers to this day.
Intel would have been happy to keep the market segmented for a few more years, but what happened instead was that the market vacuum was filled by Linux and x86 instead. That would likely have happened sooner or later anyway, but there you go.