Less than a week after Bo Ewald stepped down as CEO of Linux Networx, it was announced he will be returning to SGI as their new CEO. He will replace Dennis McKenna, who held the position since January of 2006. Ewald was an executive vice president and chief operating officer at SGI back in the 1990s. The company he will return to has changed substantially in the last few years, enduring a bankruptcy and a rebirth with a revamped strategy and product line.

It's been no secret that SGI was looking for someone to buy the company, even before it entered Chapter 11 in May 2006. With no prospects in sight, the new investors may have decided they can pull the company up by its bootstraps. In Ewald they saw someone with deep operational background in the HPC business that could help them do that. Ewald said the investors and board approached him with the idea of leading SGI back to preeminence in the HPC vendor community.

“In the long time that I've been in this business, there was always one company focused on performance-oriented computing that dominated,” said Ewald on his first day back at SGI. “In the '70s that was Control Data, in the '80s it was Cray, and in the '90s it was SGI. Now the market leaders are IBM and HP.”

Ewald said he wants to build SGI back into a company that dominates the high performance space once again. That's going to be a huge challenge. The company is in the midst of trying to get traction for its expanded product portfolio, which includes new mid-range Altix 450 servers and Intel Xeon-based cluster Altix SE servers, alongside their traditional high-end Altix 4000 supercomputers.

Ewald confirmed that the company's plans to offer the new product mix will stay in place. According to him, that means creating higher value platforms by integrating storage, performance-tailored software and professional services. This may signal that SGI is prepared to shift its resources from hardware to software and services, an approach that is rather reminiscent of Ewald's former company, Linux Networx.

“The overall strategy is on target,” said Ewald. “We'll do some work over the next quarter refining specifically what that means for products, how we put things together into solutions, and which segments we target.”

If Ewald continues the direction of Dennis McKenna, his immediate predecessor, that would entail selling SGI products into the broader enterprise HPC market rather than just to high performance technical computing customers. This “new” HPC market includes scaled-out enterprise business applications, such as real-time data warehousing, data mining, large-scale database management/analytics and digital media processing. SGI estimates this market to be in the $60 billion range, several times larger than the traditional technical computing space.

The question is can SGI reenter the game in this new arena? Will they be able to capture non-traditional HPC applications and customers? Not everyone thinks so.

This is a much more difficult task for a couple of reasons,” said Chris Willard, Senior Research Consultant at Tabor Research. “First, new customers will be much more interested in RAS [reliability, availability, serviceability], company-wide support capabilities and vendor viability than traditional HPC customers. Second, entry costs in terms of personnel time, at all levels, to develop both customer relationships and the necessary software technology are probably too high at this point. That is, the company does not have the resources to both develop new markets and support/expand traditional markets at the same time. The possible exception here might be the gaming business where SGI's traditional expertise in graphics and person-in-the-loop simulations may help.”

Willard also believes SGI will have to develop partnerships both on the distribution side to get its products the widest possible markets, and on the software side to bring new applications on line. Both are tall orders in an increasingly competitive technology environment. The real question here is does the company have enough influence to get anybody interested? To move forward, Willard thinks the company may need to build a partnering organization from the bottom up.

In any case, SGI may be the sentimental favorite for the comeback of the year. The company is well-liked by its core HPC customers and the technology is considered top notch. Bo Ewald's challenge will be to turn that good will into the kind of profitable business that the shareholders will love.