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Blog: From the Editor

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May 12, 2009

Rackable Closes Deal, Keeps SGI Brand Alive

On Monday Rackable announced it had completed the acquisition of SGI, paying $42.5 million for the legacy computer maker. This follows the bankruptcy court's approval of the deal, which was granted on April 30. The only big surprise with Monday's announcement is that the company has changed its name to Silicon Graphics International, retaining the SGI brand.

The new company will include approximately 1,300 employees, more than 1,000 of which are from the old SGI workforce. A number of original SGI execs were retained, including Dr. Eng Lim Goh, the new CTO; Robert Pette, vice president of the visualization products; and Diane Gibson, senior vice president of operations. Rackable CEO and President Mark Barrenechea will continue in his role, and the board of directors will also remain unchanged.

According to George Skaff, the company's chief marketing officer, all customer contracts made under the old SGI will be honored under the new arrangement, including the recent $40 million DoD deal announced back in February.

It still remains to be seen how the former Rackable and SGI product lines will be merged. The original SGI Altix XE server line overlaps with Rackable's x86 offerings and according to Skaff, "between the two, one will survive." But for the most part, the product lines are complementary. The plan is to pick up all or most of the SGI's current offerings, with minor branding tweaks. In a statement from CEO Mark Barrenechea released on Monday: "The Rackable name will become the brand for the SGI x86 cluster compute products. Rackable will join our other industry-recognized brands -- such as ICE Cube, Altix, InfiniteStorage, CloudRack, MicroSlice, Origin, and VUE -- to comprise the new SGI."

Skaff said no decision has been made regarding the shared-memory, Itanium-based Altix servers, but this is undoubtedly one product line that the born-again SGI will look at very carefully. The use of high-end Itanium-based servers in HPC has continued to shrink, mainly at the expense of x86 servers. With the increased power and sophistication of the latest Intel Nehalem and AMD Shanghai processors, the performance gap between the high-end x86 chips and the Itanium is narrowing. And with the ability to aggregate memory and CPUs with ScaleMP's vSMP offering (and maybe someday with a 3Leaf solution), there is less of a case for maintaining an SMP platform based on a non-standard architecture.

In any case, the new SGI will have to figure out how to make ends meet in a cutthroat server market. The previous SGI regime was running deficits on the order of $100 million per year, a model that the new company would rather leave behind. Since the merger of the two organizations didn't dramatically reduce either the product offerings or total head count, the toughest decisions on how to balance revenue with operating cost lay ahead.

Posted by Michael Feldman - May 12, 2009 @ 3:01 PM, Pacific Daylight Time

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Michael Feldman

Michael Feldman

Michael Feldman is the editor of HPCwire.

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