For the first time since 2003, Cray ended the year in the black. Thanks to a heroic fourth quarter in 2010, the company was able to net $15.1 million for the year, on a record $319.4 million in revenue. Although in many ways 2010 was a Cinderella year for the iconic supercomputer maker, the company believes it can build on its good fortune in 2011.

Last year’s numbers were driven in large part by sales of the new XE6 supercomputer (previously codenamed “Baker”), which took the reigns from the company’s XT line in mid-2010. The XE6 is based on Gemini, a new more performant system interconnect that replaced the older SeaStar technology of the XT line. The company has a recorded a total of $300 million of orders for XE6 contracts, and closed enough of this business toward the end of 2010 to power its way to profitability. “With the introduction of the Cray XE6 system, we successfully completed the biggest product launch and ramp in our history,” remarked Cray president and CEO Peter Ungaro during the investor conference call on Wednesday.

In fact, according to Ungaro, they shipped more supercomputing cabinets in the last 6 months of 2010 than they did in the previous 18 months. All told, they installed over 7 petaflops of hardware in 2010. Not surprisingly, a lot of that hardware went into top tier systems. To date, Cray has delivered four machines that deliver a petaflop a more — Jaguar (ORNL), Hopper (LBNL/NERSC), Kraken (University of Tennessee), and Ceilo (NNSA). As such, the company leads the field in petascale systems. “It’s been a great run,” noted Ungaro.

Cash-wise too, Cray has never looked better. At the end of last year, they had over $61 million on hand. And by the end of the first quarter of 2011, they expect to have $100 million of cash in the bank. That’s quite a nice nest egg for a company its size.

Perhaps the real key to Cray’s good numbers in 2010 was its custom engineering (CE) business, which quickly established itself as a big revenue generator and profit center. Launched in 2008 as a way to develop a professional services organization under the Cray umbrella, it brought in under $10 million that first year. In 2009, the business ramped up to over $30 million. And In 2010 it hit $62 million.

Although the CE revenues are still dwarfed by the company’s big hardware sales, without them, Cray would not have had such a strong year in 2009 (posting only a small loss of $600K), and almost certainly would have missed profitability in 2010. Although Ungaro and company don’t expect that steep growth curve to continue through 2011, they are looking to expand their custom engineering work significantly in 2011 and 2012.

“We feel like that’s a business we can continue to grow long-term,” Ungaro told HPCwire. “I quite honestly believe within the next couple of year it’s going to be a $100 million business for us.”

In 2011, some of the custom engineering work begun over the last years will be transitioning from development to market rollout. One example is the delivery of the second-generation XMT supercomputer (XMT-2), an architecture that Cray designed for large-scale data analytics applications, and which is being developed under the CE umbrella. XMT-2 is expected to be released later in 2011. Cray is also partnering with Netezza and LexisNexis to bring XMT-based solutions to market, although no timeline has been announced for these products.

Ungaro is jazzed about the XMT-2 delivery. According to him, even though the data analytics market is outside of Cray’s comfort zone in science and engineering, he thinks this next generation system is going to create some real opportunities to expand business. “The XMT is a real interesting product for us because it goes after a whole different part of the high performance marketplace,” said Ungaro. “I like to call it our wildcard.”

And although Cray won’t be rolling out a new XE system in 2011, the company should be able to ride on the coattails of the XE6. Not only will Cray continue to sell new XE6 and XE6m (the mini-super version) to customers in 2011, but sites with existing systems may also be enticed to add cabinets.

Speaking of upgrades, Cray does have two major enhancements on tap for the XE6. One will support the upcoming 16-core “Interlagos” CPU, AMD’s next-generation Opteron due out in Q3. Interlagos is an easy upgrade on the hardware side since the new chips will retain the G34 socket compatibility of the Magny-Cours processors. But on the software side, it’s going to require some extra effort on Cray’s part, given the revamped “Bulldozer” core architecture inside that chip.

The other significant upgrade will be the introduction of GPGPU acceleration into the XE6 product. At last year’s GPU Technology Conference, Cray announced that it was developing NVIDIA Tesla 20-Series (“Fermi”) GPU-based blades that can be plugged into XE6 cabinets. According to Ungaro, they’ve been talking with customers about the upgrades for awhile and they expect to have the Tesla-based product ready to launch in the fourth quarter.

Importantly, both the CPU and GPU XE6 upgrades will also be applied to the XE6m. Important because this more modestly priced (but less scalable) version of the top-of-the-line XE6 has allowed Cray to expand into the university market, where the company has been thinly represented in the past. (The other enabling factor here is the “cluster compatibility” mode in Cray’s latest Linux OS, which allows users to run off-the-shelf ISV codes on supercomputers.) Some notable XE6m deployments include the City University in New York, George Washington University, and Colorado State University.

Cray has also continued to rack up some big wins at climate and weather centers, including the most powerful weather forecasting system in the world — a 379 teraflop XE6 machine — at the Korean Meteorological Association (KMA). Other large climate/weather supers include the one at the National Institute for Space Research (INPE) in Brazil, the new system at the National Center for Atmospheric Research (NCAR) in Boulder, Colorado, and the National Oceanic and Atmospheric Administration (NOAA) machine installed at Oak Ridge Lab.

Cray plans to keep all of this momentum going in 2011. Confident in its ability to expand its footprint beyond its traditional strongholds of national labs, defense agencies, and intelligence organizations, and its growing custom engineering business, the company is projecting $320 to $340 million in total sales for 2011. Not much of that will be accrued in the first quarter however, estimating a Q1 total of between $35 to $40 million. Like 2010, they’re counting on the second half of the year for the big revenue surge, with half the total in the fourth quarter alone. On the product side, they actually expect revenue to be flat or even down a bit in 2011, but they think the CE business will take up the slack.

Given the elusiveness of profitability for Cray and HPC hardware vendors in general, the company’s accomplishment in 2010 stands out. Whether they can continue to keep the business on a positive trajectory remains to be seen however. Even Ungaro realizes that the outstanding win rate they enjoyed against IBM won’t last forever. And with the stimulus money drying up and governments around the world starting to pull back in the wake of a two-year spending spree, funds for supercomputers may be harder to come by.

But the Cray CEO thinks they now have the right mix of product and services, a nice cadence to their technology roadmap, and some unique offerings that differentiate them from their competitors — all of which should make for a sustainable supercomputing business. “I think we’re starting to convince people that you can be a successful pure-play HPC company,” said Ungaro.