Belluzo interview to Comp Reseller news:
(01/04/99, 3:48 p.m. ET)
By Joe Wilcox, Computer Reseller News
Closing out his first year on the job, Silicon
Graphics Inc. CEO Rick Belluzzo is rallying the
troops and the industry for what SGI hopes will
be a big comeback.
The company will start by launching its highly
touted, long-anticipated Windows NT
workstation on Jan. 11. CRN section editor Joe
Wilcox recently spoke with Belluzzo about his
first year on the job, the new workstation, and
SGI's future.
As you reflect on your first year at SGI,
how are you feeling about where things are
compared with when you started?
We stepped back and looked at where we
were and tried to develop a plan. We said we had
a 12-to-18-month transition we had to go
through, and we're halfway through that plan.
During the last number of quarters, we reduced
our expense structure, we've redone our product
road map, we divested some businesses, we
defined product direction, marketing direction,
industry direction, and a whole range of things,
and we changed the organization around that.
The big focus has been execution, and a big part
of that has been the introduction of the NT
workstation, which is a fundamental part of
getting our growth rate back, and basically
fulfilling our strategic imperative, which we feel
is to take our contribution in technology and take
it to the mainstream of the marketplace much
more effectively than we have.
Our biggest focus right now is growth and
profitability, growth through new products,
growth through focusing on servers, then
graphics, and continuing to reduce our cost
structure and achieve profitability by the end of
this fiscal year [June 30].
There has been a lot of speculation you
would help SGI move from niche markets and
commoditize its products. Is that happening?
Belluzzo: We're definitely working in that
direction. One of the big changes we're making
with the NT workstation, the Visual Workstation
as we call it, is to take our graphics systems
technology to the mainstream of the marketplace.
That is actively what we are doing right now.
We're going to do that at the desktop and in the
systems area. We take our core technology, our
capability, and take it to the mainstream of the
marketplace. This is what we haven't done for
the last several years, which is why we have
growth problems today.
Are there any particular areas in the
mainstream market you are interested in?
First of all, I wanted to say we are not
abandoning our core market of technical
computing. In addition to technical computing,
we are moving into areas like strategic business
analysis, Internet data centers, digital media, and
storage. We're changing our workstation line
with the Visual Workstation and moving into
lower-priced markets where we have not
participated in the past. So we are definitely
expanding our market presence with the
introduction of these products and the marketing
programs we have in place.
How important is the new workstation, even
in convincing people SGI is on the turnaround?
This product is important for several
reasons. First of all, it's going to allow us to grow
our revenue. The Unix workstation market has
been in decline for several years, and that has
represented a significant part of our business. So
we tended to struggle with growth because of
that factor. We now will reach a broader market
and grow our business.
Secondly, it shows the strategic imperative of
taking our technology and delivering it at
lowering price points. This is the first step in that
effort. So in that sense, it's very symbolic of what
we want people to know about the new SGI.
And thirdly, something that's a little soft but
really important, it really will represent one of
the most significant announcements in the
history of our company. It's a very exciting
product. It's very well-received. It will redefine
the marketplace, so that will create a lot of
energy, enthusiasm, and excitement around the
company.
Some argue the NT marketspace is too
crowded. What have you done to try and
differentiate the workstation from competitors'
products?
I've been in the PC space for a lot of years,
and the market is in desperate need of products
that are not beige, vanilla products that all act
the same. This product is different. It's different
in terms of performance. We have unique system
architecture we built around this product that
will deliver breakthrough performance. It's
different in terms of graphics. We've added our
graphics technology to deliver better performance
and better quality. We've also added digital media
capabilities to be able to make this product for
creative professionals.
We didn't just stick cards in the back of this
thing. We decided right from the very beginning
for it to really be a product that delivers
performance and delivers leadership. What will
be very different is we'll be doing this at PC price
points running NT applications. We're delivering
the dream people have, which is the attributes of
a PC, meaning the applications and the prices,
with the performance characteristics of
workstations.
Is it fair to say you are leveraging your
strength in digital media to commodity markets?
I don't like the word "commodity." I like to
think of it as the mainstream commodity market.
But everything we do around the commodity
[and] around the technological innovation we
have, we have to be more relevant. We have to
make it more central in the industry. We have to
deliver it to more customers. In that sense, you
can expect that from every contribution we have
made or will make in the future.
What role will the channel play in reaching
customers?
The channel will become increasingly
important to our company. We really feel to
deliver this product at large, to the mainstream
market, we will need a very well-developed
group of resellers that can take the value, take
the products, and reach a larger segment of the
market. So you will see a different channel
approach, one that is more aggressive and one
that has more breadth to it and one that makes
the channel more central in our desktop products.
Will the same apply to servers?
Eventually, I think that will be true. Today,
our server business is very high-end, very unique,
very technical, and Unix-focused. It hasn't
always been broadly received by the channel even
though we have many reseller and integration
partners for our server business. But for our
server business to become more reseller-focused,
we need different products. We will address that
over time.
So you are then restricting your new reseller
focus to the desktop?
Well, we need resellers everywhere, but the
more aggressive new push will definitely be at
the desktop.
Are there three things crucial to your
becoming profitable by the end of your fiscal
year?
The first one is to be more aggressive in
building our server high-end graphics business.
The second is to rejuvenate our desktop market
with the Visual Workstation. And thirdly,
continue to improve our business model and
focus on reducing on our expense structure, and
allowing ourselves to function in a lower
gross-margin environment.
Do you plan to bring some of your
supercomputing experience into the NT space?
We are focused on a different market space
than, say, Sun [Microsystems]. Sun is primarily
focused on enterprise traditional applications. We
are focused on what we learned in technical
computing and applying that to new application
types like strategic business analysis, the Internet,
media, and some of these other business areas.
We are focused on a different set of trade-offs, a
different set of problems, and a different set of
solutions. We are trying to position ourselves for
where the market is going and to build leadership
in certain application areas. Certainly, a big part
of our strategy is to redefine what people think
about supercomputing, making supercomputing
pervasive, and taking the technology and
expertise we have at the high end and cram it
and apply it to our Origin and server line. In
doing so, we think we can develop a rich product
line and pursue these new applications very
effectively.
Does that product line include NT servers?
We'll always consider that, but our strategy
is more agnostic when it comes to operating
systems. We will continue to drive Irix, but if
other operating systems can deliver the value
proposition, and we want it delivered around
performance, applications and scalability, we will
consider that.
Do you have any Linux plans?
Linux is increasingly important. I can't go
on a customer visit without somebody asking
about Linux. Basically, people want the
robustness of Unix, but they want a more vendor
approach to it. We will look at it, and I believe we
will have some announcements about that in the
future. |
