OBT Magazine

Silicon Graphics Inc., or SGI, is one of the storied Silicon Valley names. Co-founded by Jim Clark (who later co-founded Netscape) in 1981, SGI was a pioneer in powerful desktop engineering workstations and, later, super-powerful servers. The company got hammered by Sun Microsystems and other competitors and became a shadow of its former self after the dot-com bust. It filed for bankruptcy in 2006, limped along in a zombie state, and then was picked up in May for about $25 million by Rackable Systems--which bought it out of a second bankruptcy proceeding. Rackable renamed itself Silicon Graphics International to squeeze the remaining brand equity out of the Silicon Graphics name. Mark Barrenechea, a former Oracle and CA executive who took over as CEO of Rackable in 2006, has the task of reviving a faded icon. "It's humbling to have this incredible brand under my stewardship," he told me recently.

He's got a terribly tough job. Only two tech icons have brushed with death and come back to become powerful factors in the industry again: Apple and IBM. One of Barrenechea's hurdles is the name itself. It cuts both ways. While there's brand equity in SGI, the name also has the odor of failure lingering around it. Do tech managers really want to buy from a faded icon? While SGI's 6000 existing customers may want to stick with the name they know and the technology they have adopted, it seems unlikely that new customers will rush to sign up.

So the value of the name is a question mark.

Barrenechea is depending on other factors, namely new product development and the trend winds, to power the new SGI forward. The trend winds are blowing in his direction. Rackable specialized in producing thousands of small computer servers that are mounted on racks in data centers--so it's benefiting from the growing popularity of cloud computing. On the product side, the new SGI is starting to deliver new computers that were already underway before the merger was completed, and which strengthen its hand in a couple of important markets.

First, a month ago, it introduced a new line of deskside supercomputers for use by university researchers, national laboratories, and product designers. These babies take up very little space (one foot by two feet) but pack up to 80 microprocessor cores.

Second, on Monday, the company announced a new generation of server products, called Altix UV, aimed at supercomputing applications, large-scale databases, and data analytics. The clustered machines take advantage of x86 processors, the Linux operating system, and shared memory--so they're economical. SGI hopes to differentiate itself with a proprietary and ultra-fast interconnect system linking the servers. This marks Barrenechea's attempt to keep SGI relevant in the high-performance computing market--where he hopes to collect 30% to 40% of the company's revenues.

SGI has a solid position in supercomputing. One of its systems, nicknamed Pleiades, located at NASA's Ames Research Center in California, ranked sixth on the Top500 semi-annual ranking of supercomputers that was released on November 15. Bill Thigpen, engineering branch chief in NASA's advanced supercomputing center at Ames, says he and his colleagues chose SGI's technology when they installed the machine last year because "we got the most computing for our dollar." Also, the supercomputing center provides shared services for all of NASA, so it needs general-purpose machines that can handle a wide variety of software. That's what SGI sells. Thigpen calls the merger of SGI and Rackspace a good marriage. "It's good for the industry. By having multiple vendors in the space, everybody benefits. And having multiple healthy vendors is even better," he says.

But the crowded competitive landscape is going to be a major challenge for SGI. It faces supercomputing giants HP and IBM, an on-rushing Dell, and a strong niche player in Cray, which captured two of the top three positions in the Top500 ranking. Sun Microsystems is fading, true enough. But in a business where size matters a lot, SGI will have a difficult time keeping up with the giants.

I don't know enough about SGI and its markets to expertly handicap its chances, but, based on what I know of the industry I'm going to have to wish Barrenechea luck. He'll need it.