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December 17, 2009

HPC in 2009: Mergers, Acquisitions and Worse

by Michael Feldman

There was plenty of action in the HPC arena this year: the leap forward in GPU computing, the spread of cloud computing into the HPC realm, and the continuing multicore juggernaut, to name a few. But what really dominated the news from week to week in 2009 was the effect of the recession on HPC vendors. Payrolls across the industry were slashed — by shedding employees and cutting salaries — and company reorganizations became almost as common as product launches.

But the most visible and lasting outcome of the recession was the level of vendor consolidation that took place. Eleven companies in the HPC space were either acquired or went out of business in 2009. A number of these firms, including Sun Microsystems and SGI, were already in dire straits and were pushed over the edge by the worsening economy. Others were promising startups that simply ran out of cash and venture capital before they could establish a customer base. We recap all their stories here.

From a monetary point of view, the biggest HPC-related deal of 2009 is Oracle’s acquisition of Sun Microsystems. But the $7.4 billion marriage, which was initiated in April, has turned into a long engagement. The latest delay is the European Commission, which is fretting over the antitrust implications of Oracle’s ownership of Sun’s open source MySQL database product. Assuming this gets resolved, for high performance computing users there is a still a big question as to whether the merged entity will support Sun’s HPC portfolio going forward — this despite Larry Ellison’s assurance of keeping Sun’s product set intact.

Since emerging from bankruptcy in 2006, SGI never managed to turn a profit and in April 2009 once again found itself facing Chapter 11. In May, Rackable Systems stepped in and acquired the beleaguered computer vendor for $42.5 million. Upon rescuing the company, Rackable management decided to retain the SGI name and product set, at least for the time being. But in August, the new SGI jettisoned the visualization group and the associated VUE software product set. Most recently, at the Supercomputing Conference in Portland, the company unveiled its long-awaited Ultraviolet shared memory platform. Whether any of this translates into profitable quarters is a question to be answered in 2010.

In June, DRC Computer, a maker of FPGA coprocessor acceleration products, got bought up by one its customers: Security First Corp., a digital security firm. Like many IT vendors this year, DRC couldn’t find additional venture capital in 2009 to maintain the business as a going concern, so ended up looking for a more intimate arrangement. Security First brought over the two dozen or so DRC employees as well as company CEO and co-founder Larry Laurich. The new entity will operate as an independent subsidiary, with Laurich as the president.

Intel went on a bit of buying spree in August, snapping up software vendors Cilk Arts and RapidMind. Both companies offered parallel programming toolsets for multicore processors — technology that Intel is interested in developing, for obvious reasons. Currently, the SDK for Cilk++ (a parallel extension of C++) and the RapidMind Multi-core Development Platform are still available from Intel, but for the long run, the chipmaker is most interested in integrating the technology into its own parallel programming toolset. The RapidMind technology, in particular, will be folded into Ct (C for throughput computing), Intel’s high-level language for data parallelism.

Along those same lines, in September Microsoft bought Interactive Supercomputing (ISC). With the acquisition, Microsoft gets Star-P, a programming environment that allows MATLAB and Python programmers to run their codes interactively on standard HPC clusters. As in the Intel case, Microsoft will support current users of the software, but the end game is to bring the technology into the company’s Windows product set.

The above represents the happiest outcomes of HPC business consolidation in 2009, inasmuch as at least some of the technology and employees were saved. The rest of the vendors on this list were less fortunate.

In May, Linux cluster maker SiCortex went out of business after it failed to secure a second round of venture capital. SiCortex’ MIPS-based architecture and ultra low-power cluster design intrigued some early adopters — in the first quarter of 2009, they reported record revenues — but not enough of them to keep the business afloat. Cray later rescued the PathScale compiler technology (and engineers) from the remains of SiCortex and spun it off into an independent company.

The same week SiCortex went belly up, Woven Systems announced it was shutting its doors. The company offered high performance, adaptive routing 10GbE switches aimed at enterprise datacenters and HPC applications. In August, network security vendor Fortinet picked up some of Woven’s assets and intellectual property. The company said it would continue to sell certain Woven products, but the long term plan is to incorporate the switch technology into its FortiGate-5000 Series chassis-based security solutions.

The recession reached across the pond as well. UK vendors ClearSpeed and Quadrics also succumbed to the economic downturn.

ClearSpeed is not officially out of business, although it has been delisted from the London Stock Exchange and most of the staff has reportedly been laid off. It’s Web site is still spitting pixels however, and the company’s products can apparently be purchased through value added resellers. ClearSpeed’s CSX700 processor offers perhaps the best FP performance per watt in the industry, but its customized nature relegated it to niche status as commodity HPC accelerator solutions like GPGPUs and the Cell processor came into vogue over the past couple of years.

Quadrics shut its doors in June without much fanfare. The makers of QSNet, a proprietary high performance interconnect, had been struggling for some time as InfiniBand and 10 Gig Ethernet ate away at its market. Support for the current product set and the associated intellectual property have been picked up by Vega UK Ltd.

Lastly, we come to server maker Verari Systems, which just this week announced it was “restructuring” its business. Most of the employees are already gone, and the management left in place is busy looking for investors or perhaps a buyer to rescue what remains. SGI has already announced it will step in to provide support services for existing Verari customers.

The worst of the bloodshed may be over. Both IDC and InterSect360 Research are forecasting a modest rebound for global HPC spending in 2010, as IT budgets unfreeze and a backlog of commercial demand hits the market. A thawing of venture capital, low interest rates, and a surplus of savings should also help set the stage for an industry-wide recovery. Here’s hoping.

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