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SGI Faces Bankruptcy

Posted by ryuzaki0 on from the dire-straits dept.

Richard Finney writes " The stock chart tells the story: One time Silicon Valley high-flyer and contender for the Unix crown, SGI stock price dropped 20% on Friday ... deep into penny stock territory ... after releasing fiscal fourth quarter results. The Mountain View, California maker of high end computers is ' exploring financing alternatives with its lender and other sources.' With mounting losses and investors giving ol' Silicon Graphics the thumbs down, things aren't looking good."

18 of 383 comments (clear)

  1. Make a deal with the devil... by Anonymous Coward · · Score: 5, Interesting

    And you lose. I'm pretty sure that SGI's downward spiral can be directly attributed to their little tangle with the Beast of Redmond.

    The zombie corpse of SGI, stripped of its important 3D computing patents which went mostly to NVIDIA and Microsoft, has been shambling around for a while now, but it will take a miracle for it to pull back from the edge.

    1. Re:Make a deal with the devil... by Anonymous Coward · · Score: 3, Interesting

      Yep. They're just one more Microsoft partner turned victim.

      More recently, SGI has been working with Linux, which means that Microsoft really wants SGI dead.

      And that means that you can't trust the price of SGI's stock to provide an honest picture of what's happening in SGI. Even if SGI does the necessary financial restructuring, and improves their financial outlook, their stock will remain low, because that's where Microsoft wants it to stay. When you have enough money to burn, and you don't care about the law, it's easy to manipulate the stock price of a smaller company. Microsoft did the same thing to Corel when they were trying to arrange some bridge financing, and their Linux business was starting to grow.

      The good news is that it may not be as bad as the Slashdot article says. Unlike the intro blurb, the linked article does not mention bankruptcy. Instead, it shows a 10 percent loss on $170 million revenue. That's in the "fixable" range.

      Over the next while, I expect to see a lot of FUD aimed at SGI, in order to discourage investors from providing SGI with any financial assistance. That's another thing that Microsoft did to Corel.

      Unlike Corel, I think SGI has a fairly good chance of getting past this. Corel's business was mostly based on Windows, via WordPerfect and Corel Draw. Corel's business was therefore very vulnerable to various Microsoft tactics, and it's no surprise that business had been shrinking for years.

      SGI, on the other hand, does not have the same sort of ongoing problems. Instead, SGI's problems stem from their past, and much of that was arranged by Microsoft. You may recall former SGI CEO Rick Belluzzo, who was instrumental in changing SGI's business from their own brand of high-end computer hardware, to a strategy based on Windows NT:

      > Belluzzo gave customers another reason to stick around: The Visual Workstation, a Windows NT machine that carries SGI's trademark slick design and dazzling graphics--but not its premium pricing. Instead, he's plunging SGI smack into the rough-and-tumble business of making high-volume workstations based on Intel and Microsoft standards.

      That was the same Rick Belluzzo who made similar moves while working as Executive Vice-President at Hewlett-Packard, with similar negative results for that company. Belluzzo later got a job as COO at Microsoft, which many viewed as a reward for his work at SGI and HP.

      Anyway, the point is that those problems for SGI are in the past. SGI's current business is based on their strengths, in the areas of high-end computing, and computer graphics (e.g. for Hollywood), which includes consulting, and work on Linux. While, as history has shown, Microsoft can still do things to try to cut off SGI's air supply, at least SGI's business is not tied to Windows, which makes them less vulnerable than Corel.

    2. Re:Make a deal with the devil... by Anonymous Coward · · Score: 5, Interesting

      What the fuck are you talking about? Since it's impossible for any filesystem to be perfectly reliable in the face of arbitrary hardware failures, filesystems don't need to take hardware into consideration in order to be robust. You can simply desire that:

      1) if the hardware is running smoothly, the filesystem never fails
      2) if the hardware screws up in any way imaginable (aliens come and rape your hard disk while you're sleeping), the filesystem never fails to return to a perfectly working state (as if nothing had ever happened) and with a low amount of data loss.

      With XFS, you can tune the amount and nature of data loss in the case of hardware (power) failure. The default (which many people don't like) is to emit NULL for any region of a file that was known to have had writes that were not committed. This is arguably BETTER than filesystems that will simply give you the old contents of the file, even though the filesystem could have known that there was an uncommitted write. Of course, XFS can let you have that exact same behaviour, on a per-file basis.

      XFS also gives you advanced quota support and guaranteed-rate I/O, but most people don't need that.

      However, you shouldn't need to be a freaking guru to add the four letters "sync" to your /etc/fstab and mount any super-critical filesystems synchronous, so that power failures lose the least amount of data possible (and you take the accompanying performance hit.)

      In short, XFS' default configuration is top speed and high reliability only on high quality hardware setups (UPS or whatever), and this has surely bitten a lot of people who didn't bother to find this out/test things first/read the fine documentation.

      There is absolutely nothing about XFS that stops you from making it as reliable as any other filesystem, however. I don't see how a filesystem can not be "memory-to-disk". I guess you mean "buffered" (asynchronous) - you can turn that off dude.

    3. Re:Make a deal with the devil... by Anonymous Coward · · Score: 3, Interesting

      Well I was there through the duration and both you AND the parent poster was correct.

      When SGI bought Cray BUT let SUN keep the E10000 it devastated SGI's high end business and did make SUN a fortune. SGI couldn't really of sold the E10000 since it was SPARC and Solaris based, but hindsight being 20/20 though should have axed it. Or better yet they shouldn't have touched Cray with a 10 foot pole in the first place. That merger was an unmitigated disaster like most everything McCracken and TJ did. Cray and SGI were going out to the same customer and backstabbing each other. Not good.

      Jim Clark had the vision at SGI. Towards the end of his days there he started walking around pointing out the PC was going to bury overprices workstations and SGI, and eventually he was run out by McCracken. It was bad he was walking around saying it, but he was totally right.

      SGI's workstations first missed with the Impact because of production problems on the texture memory(and it was way overpriced). They missed again with the O2. It was great for video and some texture tricks. They advertized this 1 GB memory bandwidth but neglected to tell anyone that the CPU couldn't get over 80 MB/sec to and from RAM. You want to evaluate a computer run the STREAM benchmark so you know the sustained bandwidth to memory. A Pentium Pro of the era could easily do 200 MB/sec. The end result was unless you were using the special hardware for special applications, or your app worked in data cache it was a complete and utter dog. I'm certain it helped insure ILM made so many bad movies during the years they had nothing but O2's. They were an anchor around the necks of artists, and anyone who saw them run Maya or Softimage side by side with a PC, wanted stick a dagger in to their O2.

      Octane's were nice enough machines, better memory system than the O2 but they were very over priced and the MIPS architecture simply couldn't keep up with IA32. SGI didn't have the money or the focus to compee with Intel especially after Intel outright stole all the secrets that made the DEC Alpha so fast.

      SGI was doomed in the workstation business, the day Intel stole the Alpha's secrets from DEC and they did outright steal them, and it led to Pentium Pro, etc. It caught the IA32 architecture up to RISC almost overnight. The second blow was Windows NT which was good enough to run workstation class apps like Softimate, Maya, Pro/E etc. The third blow was Microsoft buying Softimage and porting it to Windows NT and Pentium Pro which started the rush away from SGI.

  2. huh by user32.ExitWindowsEx · · Score: 4, Interesting

    maybe nvidia will buy them (thereby fixing up lingering IP issues) and be able to open-source their video drivers.

    --
    "Evil will always triumph because good is dumb." -- Dark Helmet
  3. extremely unfortunate. by bagel2ooo · · Score: 4, Interesting

    Unfortunately, when the hardware was new I was not able to afford it. Currently I own an Indigo, Indigo2, and an O2. They are very capable and suprisingly rounded machines. I was concerned with SGIs direction during their stint of windows clusters but with the linux superclusters they've been working on lately and some of the rekindled movement with the workstations, I have been very hopeful of a bit of an SGI revival. Hopefully, they will be able to recover from this. If not, I know that many people will be greatful for the contributions they have made.

    --
    ( o ) one could say I'm rather baked
  4. Re:Well.. by Zeinfeld · · Score: 4, Interesting
    They could always sue Linux.

    Linux has always been a much bigger competative threat to UNIX vendors than to Mr Softy in Redmond.

    SGI had a ringside seat for the Web revolution, all the Netscape stuff was written on SGI. Sun trounced them because SGI made the mistake of concentrating on the 'high end' and abandoning the comodity computing area. Also all that Java mumbo jumbo somehow led people in the Internet world to think that everything had to run on Sun.

    DEC also disappeared, rmember the days when they were second only to IBM and growing faster? IBM is no longer in the PC business and its mainframe business is all but dead. They are now a consulting company that makes a few unix boxes.

    Clark predicted that SGI was on the road to ruin back in 1994 when he quit. They have been a shell for years. Pretty much all the former SGI offices off Shoreline and Charleston were taken over in the 90s.

    This is like the death of Cray or Symbolics, by the time the company finaly disappears its ten years later.

    --
    Looking for an Information Security student project suggestion?
    Try http://dotcrimeManifesto.com/
  5. This is very sad by Darth+Maul · · Score: 4, Interesting

    I have an Indy. I used in in college for CS work, and it was perfect. Learned OpenGL stuff, etc. I was the biggest SGI fanboy. evar.

    I was actually at the event that started the complete destruction of SGI. It was summer 2000 in New Orleans. This would be SIGGRAPH 2000. I actually presented a paper, and was invited to the SGI party at Anne Rice's humble adobe. This was the day of a "big annoucement", and we were ALL expecting SGI PC graphics cards. Taking the SGI name and technology into the new up-and-coming PC graphics card market was the brilliant move we all expected. Compete with nVidia, and take names.

    What did they announce? Some newer, bigger supercomputer thingy. You could taste the silence in the room.

    That was the day, certainly in my book, that sealed the fate of SGI. After that, PC graphics cards just exploded onto the scene, and the whole reason for getting an SGI became moot.

    I still love Irix, and can't believe how amazing the Indy is that I bought back in 1994. Still is a great machine, and it's a shame to see SGI finally near the end.

    --
    --- witty signature
    1. Re:This is very sad by speleo · · Score: 3, Interesting

      I had an SGI PC graphics card back in '91 or '92.

      It was a big ISA card that took up two full length slots.

      At the time I worked in QA for a large software company that did graphics software for the PC (and UNIX ports, too) and SGI loaned us a few of these things to beta.

      They worked well but the drivers were somewhat buggy. I don't recall what happened but I figure the market for PC graphic cards that cost more than the PC wasn't destined to be a big seller back in those days.

  6. Does this.... by shreevatsa · · Score: 3, Interesting

    Mean anything for the STL? I mean, is SGI still working on the STL, and will it continue to keep its excellent documentation publicly (freely) available, etc?

  7. Re:Shame by tgd · · Score: 5, Interesting

    Thats pretty debatable. The O2's were overpriced and underpowered, and Irix was SUCH a pain to work with. SysV but things just didn't quite work the same as other SysV boxes.

    SGI had gone from making significant high end hardware to making an attempt at the "trendy" market that Apple did such a good job being successful in. During the dot-com hype in the late 90's, they were pushing case design and graphics demos as justification for overpaying for their hardware.

    They were already on the way down at that point. The decision shortly after the O2 systems were introduced to start selling vastly overpriced PC-compatible Intel hardware was the nail in that coffin. (Lets hope Apple weathers that decision better than SGI did! There's a LOT of parallels between the two, only Apple has had success where SGI had failure).

    I think the last real significant (from a market innovation standpoint) hardware SGI really was selling was the Indy line, but even those were form-over-function and were mostly useful because at the time they had a real stranglehold on high-end graphics production.

  8. They should have got into the graphics card market by delire · · Score: 3, Interesting



    I said this years ago when working for a VR centre using SGI systems and saw the centre migrate more and more of their workstations to cost and performance effective NT systems.

    NVIDIA were becoming a big player, yet SGI was responsible for the extremely popular 3D library we were using.

    Their arrogance was partly to blame, they never did confess that the gaming industry would come to define the "3D graphics workstation" and that VR was fast becoming a ghost train. Instead they sent girls around in push-up bras selling upgrade licenses.

  9. Thats not trolling at all. by tgd · · Score: 3, Interesting

    Its a question they should've asked themselves six years ago.

    Sun has the advantage of being the "standard" for enterprise Unix applications. They're hurting but thats sigificant.

    SGI (aside from the Cray stuff) hasn't offered anything over other systems in half a decade.

    I used to work for a SGI VAR, and even seven years ago, most of the customers with existing installations were already looking and moving off them. The issue was people generally hated Irix, and as non-Irix hardware got better, the pain of changing platforms was mitigated by the pleasure of getting away from Irix. I commented in the parallel with Apple in another reply. SGI made the switch to Intel (or attempted it, I have no idea these days if that stuck or not) but unlike Apple, they had nothing to offer when they moved off MIPS. People didn't like their OS anyway.

  10. Let us mourn... by AnObfuscator · · Score: 5, Interesting

    ... the loss of yet *another* innovative & powerful system architecture ... yet another victim of the cheap-ass & now all-conquoring x86.

    PowerPC in Apple, SPARC in Sun, and now MIPS in SGI... one wonders how long PowerPC/POWER will last in IBM's workstations & servers...

    I love commodity hardware from a social perspective -- cheap, standardized, capable hardware means access to vast quantities of information is becoming practically free for a rapidly increasing percentage of the world's population. On the other hand, I can't help but feel a substantial pang of loss as these non-standard platforms are, despite innovative and arguably superior design, destroyed only by the economy of scale. Alas.

    RIP, SGI. You were damn cool while you lasted.

    --
    multifariam.net -- yet another nerd blog
  11. The days of high -end hardware are over by pongo000 · · Score: 4, Interesting

    Back in the mid 90's, I wrote software for a commercial satellite imaging system (now part of Space Imagining). SGIs were the workstation of choice: Very high-end, graphics without compare, in-depth support for parallel processing, and relatively fast. Cheap they were not (not to mention a fairly buggy C++ compiler in IRIX that took up many hours of our time...usually very esoteric bugs that even stumped the SGI folks).

    Back then, the rumor was always floating around that SGI was considering moving from Irix to Linux. (Did I hear correctly that they finally did, years later?) Amongst ourselves, we would talk about there was no way Linux would be able to replace Irix (remember, this was '96!), and that it would be a mistake for SGI to go this route.

    How wrong we were...SGI, like Cray and some of the others mentioned, refused to give up their hold on proprietary high-end hardware, and have fallen hard. Now that the hardware market has become commoditized, with throw-away PCs, there's really no need for companies like SGI, Sun, etc. Sun, to their credit, has tried to bail from their sinking ship by making overtures to the OSS crowd and by delving into software, but they may have been too late to start manning the lifeboats. But it's my belief that Sun's days are numbered as well.

    So a hearty farewell to SGI. I just hope they go down swiftly and silently.

  12. last time we had financial problems on slashdot... by skogs · · Score: 3, Interesting

    the financial problems were from TiVo. Everybody thought that it was stupid, and their leadership had just left. Everybody mocked me, as I shoved otherwise unused 15,000 from my portfolio into them. I would like to say that right now, if I pulled it right now, I would gain significantly from it. I'm going to wait some more time. With SGI I'm not sure. Their market seems weak to me. They still make superb and beautiful hardware, but I am afriad it is nothing that in a corporate environment I couldn't duplicate. Not identically at any rate, but I could certainly grid the corporate work environment and achieve at least competative results...and I could do it cheaper. The major university number crunching has also been well proven to be able to be run on our 'limited' hardware we store under our desks. Now, don't flame me because I think this AMD and INTEL hardware under our desks is good. Far from it, SGI's hardware whips the poo out of them. But its kind of like this: Never get involved in a land war in asia.

    --
    Who is this that even the wind and the waves obey Him? Surely this computer must submit also!
  13. OpenGL? by rexguo · · Score: 4, Interesting

    SGI is the inventor and care taker of OpenGL. Without OpenGL, desktop 3D graphics would be completely monopolised by Microsoft's Direct3D. If SGI goes down, what's going to happen to OpenGL and the OpenGL Architecture Review Board that's responsible for advancing OpenGL?

    --
    www.rexguo.com - Technologist + Designer
  14. Re:Apple should buy them out by suitepotato · · Score: 5, Interesting

    Their engineers and their software libraries alone should be worth quite a tidy sum and at least Apple would put the stuff to use in some or other product (some high end 3D package that does for 3D what FCP did for video). Microsoft would almost certainly mess it up if they bought them up.

    That said, the fact that buyers are not exactly beating down SGI's door speaks volumes in itself.

    Hey, those with mod, points... mod parent up, please. The poster makes a good point. Bear with me here, I'm going to address the second line first and proceed to the first.

    For years, SGI was seen as the platform for CGI but SGI was indeed one of the biggest bunch of arrogant bastards I ever got within ten feet of. I requested some information and nothing more and they ignored three requests and on the fourth called me and asked to meet with me at a local sales office. I asked to be sent their printed marketing material first before I would meet with them and they point blank refused and insisted on speaking with me in person at which point they'd hand me the literature.

    So I reluctantly agreed. I was looking to start a small CGI business for local broadcasters and video producers and what was on the PC platform was just not fast enough for the time frames that prospective clients were asking for. Of course, what the fark would they know, but I digress.

    I got there and they gave me the full court press. I told them at the outset that the package would have to be solid and self-consistant and problem free. I could teach myself anything they had, that wasn't the issue. Price and performance was. If it was right I might be able to swing $100K in financing toward it with the backing of some interested people. But I had to show them that it could be done in one shot.

    The SGI sales people basically ignored everything I said, kept pressing me on their most expensive machines, and kept encouraging me to blow off my would-be partners and find someone willing to go in on a deal of at least $1.5M. I wasn't planning on any such level, made it clear, they ignored me, gave the full court press, continued on.

    I ended up walking out as gracefully as I could, after it became clear they had no intention of settling for $90K worth of sales (I needed to hold back 10% for support equipments), and handed me literature that was by their own admission one year out of date and they promised the up-to-date literature would be sent anon. It never was.

    The result was no sale, the potential business never got off the ground, everyone went their different ways, and that was that. Here's where I address the first part. I tried to salvage something of my time by going with off-the-shelf PC hardware and software.

    There was maybe one Macintosh app of the time that could do anything useful and IIRC it was Electric Image. At the time, they wanted some ungodly amount of money that was a good 25%-50% above comparable Windows NT based offerings such as Lightwave and even SoftImage. The DEC Alphas of the time were faster than the Macs and they had SMP Alpha boxes availible which could really do some serious work (at that time). The Windows platform was the one to go with, but it couldn't touch SGI of course.

    Fast forward to today when Apple is selling SMP boxes every day, they have a really well put together BSD-ish/*nix-ish OS, paid supported software support, and are comparable to the Wintel side. The Wintel side can already do 64-bit, and there are boards which will take four dual-core 64-bit AMD chips. Makes the SGI base of yesteryear look like a calculator. With Apple going to Intel for their boards, a quad SMP dual-core board from Apple could be a reality fairly quickly.

    Apple was always the darling of the DTP mavens even when it lagged in power compared to Wintel and less expensive Wintel apps had more and better features than Photoshop. They nearly squandered that religious fervor altogether and if the OSX platform had been delayed any longer,

    --
    If my grammar and spelling are off, I am [distracted/tired/careless] (take your pick)