mercurycenter.com
The reinvention of Silicon
Graphics
Richard Belluzzo astounded Silicon Valley in January when he left his
role as the No. 2 man at Hewlett-Packard Co. to take the helm at
troubled Silicon Graphics Inc. Since taking over as chairman and chief
executive officer, Belluzzo has jettisoned divisions and slashed costs to
resurrect one of the valley's higher-profile companies. SGI, best known
for the workstations that generated images seen in such blockbusters as
''Jurassic Park,'' is trying to reinvent itself in an increasingly competitive
marketplace. Belluzzo talked with Mercury News Staff Reporter Tom
Quinlan about his plans for the company before this week's Siggraph
graphics design show in Orlando, Fla.
QSo why did you leave HP to go to SGI?
AI was ready for a change, I decided that I wanted to take on a
challenge where I could learn more, have more impact, do something
really uniquely different, something that was a breakthrough, something
that would bring me to a new level of development and contribution. I
was at HP for 22 years, I didn't want to think about retiring in 10 to 15
years having done the same thing again and again and again.
QWere you surprised at all, either negatively or positively, about the
position SGI was in?
AI would say I've been surprised both ways. On the positive side, I
have been incredibly impressed with the core strength and technology
capability and the product that we have in the company. The biggest
surprise was the customer relationship and the application work that we
do with customers are very distinct, very unique, completely different
than what I dealt with at HP.
On the negative side, I knew there was a lot of work to do, I guess I
found there was more work than I thought in some areas. That's been a
little more difficult, more challenging than I might have thought.
QDid you have a plan when you first started, or did you develop one
as you came in?
ANo, I didn't have a plan when I first started. People find this
absolutely hard to believe. So when I walked in, first day on the job, I
just dove into it and I will say upfront, the issues and decisions and the
direction are not really complicated, they are not very hard. It's largely
an issue of focusing on getting things done and focus on execution.
QSo what role does Rick Belluzzo play in making sure the right
decisions are made and that they're carried out?
AWhat we did on April 14th is that we announced the direction, we
announced really, our five-point plan, which includes our vision and
strategy, our market focus, our product direction, our business model,
and our ability to improve our execution. And those are the five things
we're working on.
QA number of the things that are a part of your five-point plan are
things that SGI was moving towards previously, things like incorporating
the Wintel platform into their product offering . . .
A That's correct.
QSo was SGI basically heading in the right direction before you got
there?
AWell, I would say that the plan was just incomplete. The fact is that
a lot of good things were happening at SGI. And I've embraced those
and I have not tried to change it, but I think I've added to it. I think I've
tried to complement it, especially in the area of the business model and
execution, where we need to make really quite significant changes. I
don't feel like I have to have my fingerprint on every direction in the
company.
QSo what's been the hardest decision you've had to make so far?
AProbably the hardest decision we're dealing with is getting our
business model right.
QHas it been difficult at all for you to, say, spin off the MIPS chip
area into a separate company, or to end the Cosmo software
subsidiary?
AWell, I always have a hard time with decisions that impact people,
but in those particular cases, the business decision was not very hard at
all. The IPO of MIPS, in that particularly case, we had a company that
had incredible value. Cosmo we thought had great technology, but given
the fact that we needed to focus back on our core businesses, given the
fact that we didn't really have a good understanding of the kind of
investment level we wanted to put in that, again it was a good decision
to make.
QHow does Wall Street feel about SGI?
AI think Wall Street is looking for execution and results. They also like
the story, you can read in the analysts' reports, they all tell you it's a
good story, it's a good message, they think it makes sense, but they're
going to look and hold me and the team here responsible for better
execution and better results.
QThe way Intel or Microsoft generally succeeds is slightly different.
They focus on what they consider mainstream marketplaces, and it
doesn't matter to them if they're not there first, what matters to them is
that they get there with a compelling price-performance solution . . .
AThat's right, they use their power, their size, their marketing muscle,
their position, and they frequently don't end up in the market first, they
tend to come afterwards and try to build a PC model around it. We,
obviously, can't use that strategy.
QThey've already been able to show that they can use that model in
the mainstream workstation marketplace . . .
AThat's right and that's one of the problems we had at the company,
that we didn't adapt to the PC model quickly enough. We're doing that
today. But that was an issue that we did face, the PC model impacts
everything we do, even across the entire range of product offerings, we
have to recognize that and respond to it or contribute and play a role in
that segment of the market.
We are not in a position where we are drawing a line, like we used to,
and say PC will stay below this line and we'll stay above this line.
We've eliminated that line and we're working to contribute our graphics
technology across the entire range. We won't do that, necessarily, by
doing products everywhere, but we'll do that through a combination of
products as well as partnerships so we can leverage the strength that
we have.
QSGI announced plans to enter into the NT marketplace more than a
year ago. If I'm wondering why is it taking SGI so long to get into this
marketplace, what would you tell me?
AI would tell you that we're approaching the market in a very
customer focused way. We are not going to develop another fast PC
like Dell and HP and Compaq have, we're going to develop a desktop
that is tuned towards the work of scientists, engineers and creative
people, the best, fastest, highest quality graphics in the industry with our
unique performance characteristics that are really going to work for
customers.
QWhat would be realistic to look at that would tell us SGI has turned
the corner and is now headed in the right direction.
A Well, I think you'll see us with a more active market message, more
consistency in our marketing message. We will actually be doing a lot
of things internally in terms of getting our cost structure, continually to
get that improved. We're going to be focused on servers and our high
end graphics products. We're going to be focused on getting the new
products to market. The first phase was about laying out our strategy,
our direction, talking to, getting our employees signed up for that, getting
customers to understand where we're going, make some divestitures,
and we've done all those things.
Now we're on all this internal plumbing to basically get things moving
right. And then the next phase after that is getting our new products out
and really being able to capitalize. The end goal is growth and
profitability. I won't predict when that will be, but we do have a plan
and we're working towards that plan aggressively.
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