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Technology Stocks : Silicon Graphics, Inc. (SGI)
SGI 91.52+0.9%Nov 28 9:30 AM EST

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To: Mathon Dabasir who wrote (3610)11/19/1997 2:11:00 PM
From: John M. Zulauf  Read Replies (1) of 14451
 
Mathon,

"incompatible" from a source standpoint was essentially irrelevant. Each team was pursuing next generation projects. One was further along a became the basis of the combined next-gen. The other team was repurposed to reproduce "the-best-of++" the previous generations product. Resulting in a far rich set of capabilities than either could have produce alone.

Why both? I don't know, critical mass? Alias Research certainly needed a So Cal presence, Wavefront was behind in the surface modelling area (though if you want to see lots of ex-Wavefront software in action, look at "Starship Troopers", the particles are all "Dynamation" and really look great -- actually apparently the vast majority of that movie's CG is Alias|Wavefront software based). Maybe they were afraid of losing SoftImage entirely to NT and want to protect market share. By acquiring both A&W, the protected 2/3 of the market for IRIX.

Why so much? Both Alias and Wavefront were serious, successful and fiercly independent. Remember that software companies also tend to have much higher margins than hardware companies.

Why not spin them off? I'm sure that's a question that's been asked. My guess is that they believe the expect ROI justifies the continuing investment. As SGI doesn't break out divisonal numbers, there's no way for you to know, however. As an aside, everyone online was blaming Cray for the SGI bad quarters. However what wasn't known to the stockholders until it was announced at the stockholder meeting was that Cray had in fact made every quarterly earnings committment since the merger.

Certainly we bring more than cash to the table. Our customer relationships are very strong, our understanding of our marketplace formidable. As closely tied ISV, we can help them set stragetic technology goals, and act as a test bed/alpha/bed site for new products and technologies.

As for SGI going NT... SGI has an NT strategy in place, and products of some sort planned for the next fiscal year. The O series products still have life in them and customers buying them. I've seen no indication of SGI turning into an NT only house in the foreseeable future. Certain *at least* the server market requires a non-NT solution -- know of anyway to build 64 bit, 128 proc systems on NT? There isn't one, and won't be for **years**, even after Merced ships. How long from the 386 and 32bit proc, to Windows 3.0 (a 32bit O/S) years.

Unofficially,

john
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