03/24 15:31
Silicon Graphics' Film-Effects Business Rivaled by Compaq, Dell
By Peter Brennan
Hollywood, California, March 24 (Bloomberg) -- In the contest for this year's best visual-effects Oscar, ``The Perfect Storm'' and ``Gladiator'' are competing for votes from Academy of Motion Pictures Arts and Sciences members.
Silicon Graphics Inc. has already won. Its server computers helped create the special effects for both the fishing-boat tragedy and the epic of the Roman empire, as well as ``Hollow Man,'' the category's dark-horse nominee in tomorrow's presentation.
Companies such as Compaq Computer Corp., Dell Computer Corp. and Sun Microsystems Inc. are trying to take Hollywood's business from Silicon Graphics by providing similar products at less cost. The competition is one reason Silicon Graphics' sales have declined 36 percent since 1997, to $2.3 billion last year.
``Silicon Graphics' power is waning,'' said Andrew Siedel, head of systems for Blue Sky Studios, a unit of Fox Entertainment Group Inc. ``You can now get desktops and servers for a fourth of what their machines cost and perform as well or better.''
Silicon Graphics once was the dominant graphics player in Hollywood, where its servers and other products powered the effects in movies from the underwater adventure ``The Abyss'' to Steven Spielberg's ``Jurassic Park,'' which resurrected the dinosaurs.
The company, though, has lost favor on Wall Street after recording six straight quarters of losses. In December, it sold part of its Mountain View, California, campus to raise $276 million in cash. Its shares have fallen more than 70 percent in two years.
Rivals Move In
Sun Microsystems provided servers to Pixar Animation Inc. for ``Toy Story 2.'' Dell said its servers helped create the virtual- reality effects for the cult favorite ``The Matrix,'' and Compaq said its machines sank ``Titanic'' again in the highest-grossing movie of all time.
Blue Sky Studios of White Plains, New York, picked Compaq servers to create effects for its animated ``Ice Age.'' The movie, about the adventures of a sabertooth tiger, a mammoth and a giant sloth, will be released next year.
Blue Sky executives ruled out Silicon Graphics because its gear was twice as expensive as rivals' and wasn't as fast. Silicon Graphics' machines can cost as much as $200,000 apiece, though prices vary according to power and design.
Compaq also beat out Sun on price. In addition, its servers are smaller and similar to those Blue Sky used on ``Bunny,'' which won a 1999 Oscar for best animated short film.
The studio bought 512 Compaq Alpha servers worth $11.5 million, and now touts itself as one of the world's top 50 supercomputing centers.
``Compaq is leapfrogging over the competition,'' Siedel said.
Hollywood `Birthright'?
Silicon Graphics isn't about to become a bit player, said Greg Estes, the company's vice president of telecommunications and media. Dell exaggerated its role in ``The Matrix,'' and clones, not Compaq servers, were used for ``Titanic,'' he said. Dell and Compaq dispute that.
The Hollywood market ``is practically our birthright, and I absolutely intend to defend it,'' said Estes. ``They want to put on leather pants and say they're hanging out in Hollywood. That's not what it's about.''
The film industry spent about $250 million last year on servers and peripheral equipment, said Steve Briggs, who leads Compaq's high-end film and video-computing group. Another $250 million was spent on workstations and services. That's a small part of the estimated $7 billion spent last year on visualization and simulation, mostly by the medical and defense industry, for the same kind of gear.
Even so, computer companies like the high-profile Hollywood niche market.
``Four hundred million people have seen `Titanic,''' said Briggs. ``When things like that are used in advertising, there's an immediate hook.''
New Products
In turn, the studios provide the computer companies with cutting-edge work. That lets them develop skills and equipment that can be used in other industries.
``We are the sizzle. We are the sex appeal,'' said Tom Atkin, executive director of the Santa Monica, California-based Visual Effects Society. ``We know how to use the technology better than anybody on earth. We are the top end of the testing.''
In the past, Silicon Graphics' proprietary systems were about the only choice for top-notch effects. Now, there are more operating systems capable of producing such graphics, such as Linux and Microsoft Corp.'s Window NT, and plenty of programmers.
At Digiscope, a Santa Monica, California, studio that's creating effects for ``The Mummy Returns,'' a clone server installed this year sits next to a couple of older Silicon Graphics machines.
``The difference in price is substantial. It's a fifth of what a Silicon Graphics server would cost,'' said Dion Hatch, visual effects supervisor. ``We're now seeing a lot of low-cost servers getting into the market.''
Silicon Graphics is trying to maintain sales by allowing its software and hardware to be used with other operating systems.
Jon Peddie, president of Jon Peddie & Associates, which publishes reports on the computer-simulation industry, said Silicon Graphics has regained ground in the past six months under its new management. The market is exploding because of demand for better effects, Peddie said.
``Companies that have not traditionally been in this market are entering it,'' he said. ``The demand for high-octane entertainment is increasing exponentially in the form of games, televisions and movies. The computer power needed to satisfy this demand is still trying to catch up.'' |
