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Technology Stocks : Silicon Graphics, Inc. (SGI)
SGI 92.67-1.4%3:59 PM EST

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To: ramin shahidi who wrote (5526)1/11/1999 8:47:00 PM
From: Jojo Mosko  Read Replies (1) of 14451
 
"Is SGI going after a niche market again? Tell me I'm wrong. "

Hi Ramin,

No hard feelings please.

Looks like a lot of misunderstanding is going on regarding
the new workstations. First, they are not, repeat: not
intended to the home PC market. SGI has made it pretty clear
that it is targeting professionals in the technical computing
area (CAD, CAM, VisSim, Media creation, etc.)

Is this a niche ?
Well, in terms of unit volumes, it is a niche compared to
the home PC market, but it is certainly not a niche compared
to the current SGI volume of less than 100,000 machines / year.

Looking at it from the price point: these 4K - 8K dollar machines
(depending on config) are replacing machines that cost ~4 times
as much (e.g. Octanes), and if you look at "comparable" high end
PCs, then you should consider that just a high-end graphic card
like the Intergraph Wildcat costs like the whole SGI 320 system
or more.

Regarding the performance of these machines: I heard they
will have some record performance in some intensive graphics
benchmarks (e.g. the first Intel hardware to hit the 200 mark
ViewPerf CDRS) however, this is not the main reason why
professionals would buy them. It is some of their unique
capabilities like being able to map 4 streams of video in
real-time into texturing memory, or having "unlimited" amount
of texture memory due to the UMA architecture (no separate
"graphic" memory but rather the main memory of the machine
is shared by the graphics engine). Add to this the completely
digital display (no analog signal), the much faster I/O (6 times
PCI speeds, I'm told) and as a result for some applications
these machines would not just be "faster" they would simply
be able to do what no other Intel workstation can do at any
price.

I've seen some demos on these machines and I must say
that nothing else I've ever seen on the desktop (and I've
seen 60,000K workstations) comes to this price performance or even
close. This is not about reading a "fact sheet". You have
to see them in real life to understand the value. Comparing
them to a Dell with a high-end graphics card based on a data-sheet
is missing the whole point. Go see a demo, and them share
your experience.

Summary:

- A volume "niche" compared to home PC, but
a great opportunity for SGI to expand its current
limited volumes significantly
- Machines that can do what no other machine in this
market can do today
- Machines that do graphics and I/O at significantly
better price/performance than what exists today
in this market.


I hope this explains the "niche" issue.
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