Scooter, Sonki (SGI) & Sonny,
CPQ: Its good bedtime reading have a gander,(With a hint of APPLE)
D2
October 30, 1997
PBS Online
I, Cringely
"I think, therefore, I think."
Volume 1.31 I, Cringely
What's a few MIPs between
friends? Why SGI and Apple are
about to be changed forever.
by Robert X. Cringely
Last week I was in Ohio, flying a little yellow biplane over the stunning fall colors of the Shawnee State Forest, not far from the Ohio River. The air was crisp with a tiny bite of winter as I wheeled over the foothills of the Appalachian Mountains. It could have been 1917 as easily as 1997 and my little yellow biplane could have been a scout somewhere over the Western Front. But there were no Huns in the sun that day, which was good, since I was unarmed. And dressed in my snowmobile suit from Wal-Mart, I was definitely out of uniform.
Living in California, where the seasons are labelled "wet" and "dry," or "warm" and "slightly less warm," it's easy to lose track of the passage of time. My cubicle doesn't show the seasons, though my computer screen is certainly starting to show its age. And the forests in my part of California show little of the fire I remembered from the Ohio of my youth or even the Ohio of last week, flying over Shawnee.
Even though Silicon Valley doesn't show the seasons very distinctly, that doesn't mean the seasons don't change. They change in more respects than just climate and the time of sunrise. They change in the passage of eras and ways of living. I don't want to be too heavy about this, but there are some major structural changes taking place in Silicon Valley that make me just a little sad. The place stands to be just a bit drabber soon, its colors muted by the passage of some favorite players of mine. First there's Silicon Graphics, masters of 3-D workstations and for many years the darlings of Hollywood special
effects directors. Arnold wouldn't have a career with SGI. While I am not saying it's hasta lavista baby for SGI, I am saying the company is in for some major changes that go far beyond this week's layoff of 500 workers. Silicon Graphics is in trouble. The company is an
anachronism in the leaner, meaner Silicon Valley of 1997. SGI is a flashy company with even flashier offices and employee benefits fashioned in the good old days of the 1980s. But times have changed and SGI is losing market share in its traditional 3-D graphics business, while the Web server business, which was supposed to take up the slack,hasn't performed. In the first instance -- the 3-D business -- SGI has killed itself by making a pact with the devil, which
of course means Microsoft. In a successful attempt to make its 3-D software the standard for high-end systems, SGI licensed its OpenGL
graphics libraries -- its family jewels -- to Microsoft. For a one-time fee, Redmond got to throw OpenGL into both Windows NT and Windows 95, making it possible for a generic Intel workstation to run any 3-D application that would run on a top-of-the-line SGI workstation. Bad move. SGI was betting on both its superior hardware and a superior operating system -- Unix. Both were bad bets. It's
not that SGI hardware isn't very, very good, but that it isn't
good enough for the price. In a world where cheaper workstations can be ganged to do big jobs, a great number of cheaper computers became the rule. When Pixar Animation Studios animated Toy Story on SGI
workstations but rendered it (painted the millions of actual
frames) with a farm of Sun servers, the writing was on the
wall. Steve Jobs could find no qualitative difference between SGI and Sun for rendering, so half the SGI business at that time simply went away. Two years later it's even worse, and Pixar's next big rendering job could well be done on Pentiums running NT, thanks to the deal with
Sun. By the time it was clear that the 3-D graphics business was
fading, the World Wide Web was supposed to take over. And true to SGI's glorious history, the company developed some of the best Web development tools around. But Web development tools, like 3-D animation tools, don't have to be run strictly on SGI boxes. There are many more Web servers than Web development systems, and the best
price-performance Web servers are Intel-based, a fact that
will soon come home not just for SGI, but also for Sun and Digital.
So what's to come of SGI? Well the boss, Ed McCracken,
will soon be history. And the company itself will follow one
of two courses. First, they have to get their profit margins
up by taking cost out of the hardware. This means embracing the demon by building (or buying) Intel boxes running Windows NT. The days of SGI's custom hardware,and even its very powerful line of MIPs processors, are fading. The second course, which isn't at all in conflict with the first, is that the company will be sold. Certainly the MIPs processor business has to go, and maybe the rest of
the company with it. MIPs chips certainly aren't going to go
away, since there is one inside every Sony PlayStation. And
there are tons of MIPs R-10000 chips at the heart of every nonstop mainframe from Tandem Computer, too. Tandem is now owned by Compaq. Tandem needs MIPs processors, which means Compaq needs MIPs processors. Compaq would like to dominate the 3-D graphics market
and would also like some advantage in Web development tools. Compaq can also use all the good engineers it can find. Is a pattern beginning to emerge here? Look for Compaq to take a strong run at SGI.
This business of superstrong companies acquiring weaker
ones has taken a strange turn. John Chambers, CEO of Cisco Systems, says he will acquire 12-15 companies this year, not just for their products but mainly for their people. Cisco is growing so fast and good engineers have become so hard to find that it is sometimes worthwhile to buy the company, and scrap the products just to get a few good programmers. Microsoft does the same thing. Try to find
anywhere in Microsoft's product offerings the work of the
Myhrvold brothers, whose company was acquired by Bill Gates several years ago. SGI isn't the only company going through growing pains.
Apple has them in abundance, too. This week Steve Jobs said he would stay as CEO, but only on an interim basis. A CEO search is supposed to be continuing, with the plan being to hire a new guy or gal by the end of the year. Not according to Larry Ellison, who sits on the small Apple board of directors. Larry told me three weeks ago that Steve had already decided to take the job for real. And even if he's changed his mind, there is no current CEO search underway in Cupertino. Thee's no way Apple will have a new head hincho by the end of the year.
What Apple MAY have by the end of the year is a biggish chunk of cash in exchange for the Hardware Division.Repeating the lesson learned at NeXT, Apple appears to be getting out olf the hardware manufacturing business.Though unlike NeXT, Apple isn't dropping hardware entirely, just the manufacturing of hardware. There is so much available high-quality manufacturing capacity in the Far East that Apple can make more money through contracting its manufacturing than by rolling its own. Expect several thousand Apple employees to depart with the
factories when a buyer is eventually found. As a guy who worked at Apple a million years ago and can remember times when the whole company would pac Apple IIs in boxes, this move out of building computers makes me sad. But it has to happen if Apple is to have the
resources to compete. Steve's right about this. It's all part of
his plan to turn Apple into that Hun in the sun. |
