SGI Sets Sights On Turnaround

grub wrote to us about an article about SGI, and its ongoing battles to turn its corporate fortunes around. The company's been doing interesting stuff for a long time - here's to hoping they stay around.

Comments

Bad news on the horizon

[dfeldman]

One of my buddies is a manager at SGI and he's not quite as optimistic as the P.R. folks are. He said that there were several reasons for their business slowdown, and none of them were easy to solve:

• Consumer-grade video hardware has quickly outpaced SGI's best offerings. A GeForce3 has the same processing power as their best offerings from just two years ago, and doesn't cost as much as a new car.
• Management issues cripple the company. The lack of profits through the year 2000 weren't a result of low demand; they were a result of running a bloated, disorganized company that didn't know what their resources were or how to use them.
• Morale is at an all-time low. Coupled with the fact that the market for high end hardware is very weak headed into 2002, they are going to have at least a few more rough quarters.
• Expenses are killing them. They spend millions of dollars a year supporting Windows NT clients, open source efforts, and R&D into doomed technologies like the Itanium. Since few of these things will ever pay off in our lifetime, the money is as good as wasted.

The market has spoken, and the message is clear: proprietary technologies are on the way out. Even Sun, the mother of all vendor lock-in schemes, has started to use standard PC components in building their machines. SGI can still sell to their niche market, but they need to severely narrow their focus and cut a good deal of fat before they can be profitable again.

df