SGI goes out with a whimper:
Once-Mighty SGI Sold to Rackable for $25 Million
April 1, 2009, 9:14 am
By Ashlee Vance
New York Times
A collective shudder rippled through Silicon Valley on Wednesday morning, as Rackable Systems announced its purchase of Silicon Graphics Inc. for just $25 million in cash.
If you travel all the way back to 1997, SGI was pulling in close to $4 billion in revenue a year. The company produced some of the flashiest computers on the planet for handling tough graphics jobs. SGI was the next big thing in Silicon Valley, and people adored the company.
For some perspective, consider this sentence from a 1998 story in The Times.
Although Silicon Graphics is not considered a technology bellwether like Intel or Compaq, it was once one of the nation’s fastest-growing companies, best known for building extraordinary computers that helped create special effects for the “Jurassic Park” films.
Ah, those were the days.
Terms like “bellwether” and “fastest-growing” haven’t been used anywhere near the SGI name for years. The company used to thrive by selling computers based on its own chips and operating system. Such technology, however, was undercut by cheaper graphics products from companies like Nvidia and cheaper mainstream chips from Intel.
In addition, SGI made a blunder by opting to move all of its computers over to Intel’s lackluster Itanium chip.
SGI was forced into bankruptcy a couple of years back and has been struggling ever since. (The company announced that it had filed for bankruptcy once again on Wednesday morning just before revealing the Rackable deal.)
Rackable sort of resembles SGI, in that it used to be the next big thing in corporate hardware as well. As I reported earlier this week, Rackable was a shining star in 2006 before Dell started putting serious pricing pressure on the upstart, fighting it for customers like Facebook, Microsoft and Yahoo.
By buying SGI, Rackable takes on some engineers with expertise in building large, complex systems as well as some intellectual property around graphics and server technology. (Regrettably for SGI, the company sold off some its key 3-D graphics technology to Microsoft earlier this decade.)
While SGI has met with an unceremonious end, one of its founders has a new beginning.
The company was started in 1982 by former Stanford University professor James Clark, who went on to found Netscape Communications (since we’re going down memory lane). Last month, Mr. Clark, 65, married the Australian swimsuit model Kristy Hinze, 29.
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