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SGI Steps out of the Visual Workstation Market
Lars Bergstrom writes "Well, SGI's finally given up on their Visual Workstation product line -- check here for the details. " As many people have noted, the technology was pretty sweet, but people won't pay the huge premiums for that. At least the flat panels are great.
The SGI investor page says it all
www.sgi.com/investors
(press reload a few time for maximum effect)
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I'm surprised people here are so ignorant about the realities of the marketplace.
... the XIO bus still beats the wet dreams of FutureIO and is here now) but then they do certify and guarentee the performance of the ones that do make the effort. If SGI was smart, they'd license the XIO technology to foster a vibrant alternative.
Facts
1) If a company doesn't have a competitive advantage, then sooner or later it will lose marketshare. The NT based Intel line (idea of the previous CEO) was targetting a niche which has been eroded by Dell's just-in-time assembly and creating a gap until HDTV standards become mandatory. SGI is being smart cutting their losses when they can. Unlike the disposable mentality that Wintel is trying to foster, SGI machines are designed to last for a long time (10 years+) which if your amortise the higher upfront costs, is actually cheaper in the long run.
2) SGI still has 300 odd engineers working on Irix and a growing pool of Linux developers to progressively shift their core competencies (multiprocessor design, low-latency memory subsystems) into value-added components. 10% of the market is seriously interested in high performance vs good enough.
3) Processors take a long time to die. Their MIPS line still has got excellent cost per application performance and decent data bandwidth (running a gigahertz Intel chip with IDE drives to surf the internet sounds a little fishy). As an embedded processor, the x86 is dwarfed by sales of MIPS cores cross-licensed to multiple vendors and their high-end stuff (R16000, etc) goes out to another 7 years.
4) The world market has been very very lucky in the Asian crisis has depressed global supply to such an extent that firms are willing to sell subsystems at near cost just to keep the cashflow up. In my opinion this has distorted the market and once things start bouncing back (as with the recent hike in memory prices) then their offerings will be more competitive.
5) Intel is becoming more like a venture capitalist than chip maker by throwing advanced designs at anything that looks, walks and talks like a high-growth startup. SGI is sorta doing the same thing by developing high-end, then flowing the tech to NDIVA (graphics), Cray (memory subsystem) and MIPS (CPU design).
6) Forget hardware, the value is now concentrated on the services. Even IBM are finding it difficult to move their big iron. Ultimately you will see companies becoming coordinators assembling components and software bundles to targetting specific market categories and capturing benefits from after-sales support and in the life-time money stream. You'd might be surprised how little car manufacturers make from sell the initial wheels compared with gouring consumers with repairs and add on knic-knacs.
7) Linux is shifting the competitive landscape in that every processors has an equal chance as the source is available to all players. Intel is recognising this and is dumping money to maintain dominance. If IBM can offer a PPC reference design, then perhaps SGI could do something similar for their MIPS, OpenGL and other graphics libraries (ie OpenAPI but retain implementation IP). Don't rule out the Koreas with their Alpha licensing and the Japanese with MIPS variants (e.g. Sony Playstation2).
8) Lighten up, markets go up and down in the short term. If anyone recalls the dumping Apple was going through several years ago, SGI is going through a similar patch. With a new CEO on board and some good Linux buzz, they have opportunities to catch the next wave. From a professional point of view, it would be interesting to see if their boxes could be adapted to keep the same fast memory subsystem but accept MIPS, Cray, Intel or Alpha processor node cards and just absolutely dominate the SMP and Beowulf market.
9) High end graphics is tough with very few firms having the capability to tackle complex real-time graphics and simulation. Today's multiplayer games are a shadow of hosting real-time thousands of players. If SGI could shift some of their talent to exploit the gaming niche, then they could gain more revenue streams from selling their IP. Admittedly they do have problems with delayed supply of third party boards (sigh
In short, SGI may be down at the moment but certainly not out. You don't have to be big so long as you can be profitable in your own little market niche, afterall BMW and Rolls-Royce still survive despite the Fords, Hondas, etc of the world. If people stop fixating on pure clock speed and look at real-world performance (e.g. broadband systems) they might be pleasantly surprised.
LL
Where did you read that? They are dropping some lines of workstations,
not "stepping out of the market". Their MIPS roadmap extends, it says,
to 2006 and their Intel plans are very much in place.
Slashdot could do with editors who actually read the subject matter.