Profitable Year Eludes Cray in 2009

By Michael Feldman

February 18, 2010

If Cray were the federal government, everyone would be singing its praises this year. In 2009, the iconic supercomputer maker, for all intents and purposes, balanced its budget and ended up with more cash reserves than it has ever had. But Cray is a business, and the thin line between profit and loss still represents the boundary between success and failure.

First to the numbers. For 2009, Cray reported a record revenue of $284 million, against a minuscule $600 thousand loss. That’s a significant improvement over 2008, where the company saw just slightly less revenue, $282.9 million, but suffered a net loss of a $40.7 million. Better yet, Cray finished the year debt-free, having retired all its convertible notes. In addition, the company now has $113 million in cash and short term investments, roughly twice what it had available at the end of 2008.

Cray CEO Peter Ungaro pointed to the growing sales of custom engineering, the CX1 deskside system, and the XT mini (XT5m) systems as three areas where they were able to make up for some lost ground in their bread-and-butter big systems sales. Service revenue, driven by rapid growth of custom engineering work, grew by 33 percent year-over year, contributing $84.9 million to the bottom line.

While Ungaro was disappointed about not being able to deliver an outright profit, he seemed especially pleased that 2009 revenue was less dependent on sales of a few large machines, and more evenly spread across smaller systems (the CX1 and XT minis) as well as service revenue. Because of Cray’s reliance on big supercomputer contracts, which tend to occur at somewhat long and unpredictable intervals, the knock on Cray from investors has always been that its sales were “lumpy.” With a more diversified supercomputing systems and services portfolio now in place, some of those lumps are going to be smoothed out.

The blame for the $600K profit shortfall was attributed to the DARPA contract fumble. As reported in January, a contract modification for the Phase III HPCS work, related to a missed milestone, was delayed and cost Cray around $15 million in R&D compensation. Had the contract mod been completed during the fourth quarter and the milestone achieved, the company would have easily been profitable for the year.

The HPCS contract mod is now in place. Under the revised agreement, $92.5 million worth of R&D reimbursement will be shuttled to Cray over the next three years, contingent, of course, upon the completion of specified milestones. The end game for Cray’s HPCS effort is deliver the Cascade supercomputer prototype near the end of 2012. According the Ungaro, they expect to deliver Cascade systems to customers shortly thereafter.

With 2009 now in the rear view mirror, Cray is forecasting 2010 will be a year of (surprise) record revenue and profitability. To help fulfill that prediction, the company is launching two new supercomputers this year: the XT6 and the next-generation “Baker” supercomputer. The XT6 supers and the associated XT6m minis will incorporate AMD’s upcoming 8- and 12-core Magny-Cours Opteron processors. Those systems were previewed at SC09 and are currently on track to be released into the wild in the second quarter of this year.

Right on the heels of the XT6 is the company’s next-generation XT, codenamed “Baker,” which is scheduled for release in Q3. The new system encompasses both new interconnect hardware and a new software stack. “This will be, without a doubt, the most significant upgrade to our XT line since its inception in 2004,” Ungaro told investors. “And we believe Baker will be a very competitive offering at the high end of the supercomputing market.”

Hardware-wise, Baker is based on an XT6 compute blade, but with Cray’s new “Gemini” interconnect included as a replacement for the current SeaStar2 technology. Gemini, which promises better performance, reliability and features, is still in development, but is supposedly on schedule for its Q3 debut. Apparently Cray has built the XT6 blades such that the SeaStar2 hardware can be upgraded to Gemini if need be. An XT6-Gemini upgrade could presumably be used as a backup plan by would-be Baker customers if the launch of the new system runs into glitches.

Cray, of course, is hoping this will not be necessary. Revenue and profitability in 2010 will hinge upon the company hitting its Baker launch in the third quarter. Theoretically that should allow enough time to install the new systems for its early customers (e.g., NERSC and KMA) and realize the revenue after those systems are accepted. Because of the timing of the Baker launch, the company is already telling investors to expect a “significant majority” of 2010 revenue to be recognized at the end of the year.

Later this year, Cray also intends to bring a new line of HPC systems to market, positioned between the CX1 and the XT6m. No details were forthcoming, but the idea is to basically fill the gap between the CX1 microcluster and the XT minisuper, further diversifying its product portfolio.

Cray is also looking to expand its service sales this year, forecasting its total revenue at around $110 million. Again, they’re looking at the customer engineering group to drive most of this growth.

Interestingly, one of the first custom engineering contracts in 2010 involves a non-HPC application. Although Cray execs were not at liberty to name the customer or give out many details about the contract, apparently a large commercial company tasked Cray to research and prototype a future infrastructure for a cloud computing-type datacenter. Significantly, the contract represents Cray’s first foray outside of the supercomputing arena.

Some extra income may be captured from the second year of government stimulus funding, both in the US and elsewhere. Last year, the Jaguar upgrade at ORNL was funded by stimulus money, propelling the system to the top of the TOP500. Ungaro hinted there is at least one more stimulus-related US contract in the pipeline, as well as some other possibilities globally. But on the whole, he sees the HPC stimulus effect ramping down in 2010, even as the overall strength in the government sector looks good for supercomputing.

Meanwhile, the competition at the high-end of HPC is heating up. IBM is launching its POWER7-based HPC servers — the IBM Power 755 — this month in advance of the XT6 and follow-on Baker system. Ungaro said he thought the new IBM gear will be a good product line, but he feels Cray is strongly positioned with Baker and the XT6 line to compete head-on with its arch-rival. Cray also has to consider that competitors like SGI, and its new Altix Ultraviolet line, and Bull, with its bullx supers in Europe, also may cut into Cray system sales. Making a living off supercomputers has never been easy, and 2010 will be no exception.

Subscribe to HPCwire's Weekly Update!

Be the most informed person in the room! Stay ahead of the tech trends with industy updates delivered to you every week!

How ‘Knights Mill’ Gets Its Deep Learning Flops

June 22, 2017

Intel, the subject of much speculation regarding the delayed, rewritten or potentially canceled “Aurora” contract (the Argonne Lab part of the CORAL “pre-exascale” award), parsed out additional information ab Read more…

By Tiffany Trader

Tsinghua Crowned Eight-Time Student Cluster Champions at ISC

June 22, 2017

Always a hard-fought competition, the Student Cluster Competition awards were announced Wednesday, June 21, at the ISC High Performance Conference 2017. Amid whoops and hollers from the crowd, Thomas Sterling presented t Read more…

By Kim McMahon

GPUs, Power9, Figure Prominently in IBM’s Bet on Weather Forecasting

June 22, 2017

IBM jumped into the weather forecasting business roughly a year and a half ago by purchasing The Weather Company. This week at ISC 2017, Big Blue rolled out plans to push deeper into climate science and develop more gran Read more…

By John Russell

Intersect 360 at ISC: HPC Industry at $44B by 2021

June 22, 2017

The care, feeding and sustained growth of the HPC industry increasingly is in the hands of the commercial market sector – in particular, it’s the hyperscale companies and their embrace of AI and deep learning – tha Read more…

By Doug Black

HPE Extreme Performance Solutions

Creating a Roadmap for HPC Innovation at ISC 2017

In an era where technological advancements are driving innovation to every sector, and powering major economic and scientific breakthroughs, high performance computing (HPC) is crucial to tackle the challenges of today and tomorrow. Read more…

At ISC – Goh on Go: Humans Can’t Scale, the Data-Centric Learning Machine Can

June 22, 2017

I've seen the future this week at ISC, it’s on display in prototype or Powerpoint form, and it’s going to dumbfound you. The future is an AI neural network designed to emulate and compete with the human brain. In thi Read more…

By Doug Black

Cray Brings AI and HPC Together on Flagship Supers

June 20, 2017

Cray took one more step toward the convergence of big data and high performance computing (HPC) today when it announced that it’s adding a full suite of big data and artificial intelligence software to its top-of-the-l Read more…

By Alex Woodie

AMD Charges Back into the Datacenter and HPC Workflows with EPYC Processor

June 20, 2017

AMD is charging back into the enterprise datacenter and select HPC workflows with its new EPYC 7000 processor line, code-named Naples, announced today at a “global” launch event in Austin TX. In many ways it was a fu Read more…

By John Russell

Hyperion: Deep Learning, AI Helping Drive Healthy HPC Industry Growth

June 20, 2017

To be at the ISC conference in Frankfurt this week is to experience deep immersion in deep learning. Users want to learn about it, vendors want to talk about it, analysts and journalists want to report on it. Deep learni Read more…

By Doug Black

How ‘Knights Mill’ Gets Its Deep Learning Flops

June 22, 2017

Intel, the subject of much speculation regarding the delayed, rewritten or potentially canceled “Aurora” contract (the Argonne Lab part of the CORAL “ Read more…

By Tiffany Trader

Tsinghua Crowned Eight-Time Student Cluster Champions at ISC

June 22, 2017

Always a hard-fought competition, the Student Cluster Competition awards were announced Wednesday, June 21, at the ISC High Performance Conference 2017. Amid wh Read more…

By Kim McMahon

GPUs, Power9, Figure Prominently in IBM’s Bet on Weather Forecasting

June 22, 2017

IBM jumped into the weather forecasting business roughly a year and a half ago by purchasing The Weather Company. This week at ISC 2017, Big Blue rolled out pla Read more…

By John Russell

Intersect 360 at ISC: HPC Industry at $44B by 2021

June 22, 2017

The care, feeding and sustained growth of the HPC industry increasingly is in the hands of the commercial market sector – in particular, it’s the hyperscale Read more…

By Doug Black

At ISC – Goh on Go: Humans Can’t Scale, the Data-Centric Learning Machine Can

June 22, 2017

I've seen the future this week at ISC, it’s on display in prototype or Powerpoint form, and it’s going to dumbfound you. The future is an AI neural network Read more…

By Doug Black

Cray Brings AI and HPC Together on Flagship Supers

June 20, 2017

Cray took one more step toward the convergence of big data and high performance computing (HPC) today when it announced that it’s adding a full suite of big d Read more…

By Alex Woodie

AMD Charges Back into the Datacenter and HPC Workflows with EPYC Processor

June 20, 2017

AMD is charging back into the enterprise datacenter and select HPC workflows with its new EPYC 7000 processor line, code-named Naples, announced today at a “g Read more…

By John Russell

Hyperion: Deep Learning, AI Helping Drive Healthy HPC Industry Growth

June 20, 2017

To be at the ISC conference in Frankfurt this week is to experience deep immersion in deep learning. Users want to learn about it, vendors want to talk about it Read more…

By Doug Black

Quantum Bits: D-Wave and VW; Google Quantum Lab; IBM Expands Access

March 21, 2017

For a technology that’s usually characterized as far off and in a distant galaxy, quantum computing has been steadily picking up steam. Just how close real-wo Read more…

By John Russell

Trump Budget Targets NIH, DOE, and EPA; No Mention of NSF

March 16, 2017

President Trump’s proposed U.S. fiscal 2018 budget issued today sharply cuts science spending while bolstering military spending as he promised during the cam Read more…

By John Russell

HPC Compiler Company PathScale Seeks Life Raft

March 23, 2017

HPCwire has learned that HPC compiler company PathScale has fallen on difficult times and is asking the community for help or actively seeking a buyer for its a Read more…

By Tiffany Trader

Google Pulls Back the Covers on Its First Machine Learning Chip

April 6, 2017

This week Google released a report detailing the design and performance characteristics of the Tensor Processing Unit (TPU), its custom ASIC for the inference Read more…

By Tiffany Trader

CPU-based Visualization Positions for Exascale Supercomputing

March 16, 2017

In this contributed perspective piece, Intel’s Jim Jeffers makes the case that CPU-based visualization is now widely adopted and as such is no longer a contrarian view, but is rather an exascale requirement. Read more…

By Jim Jeffers, Principal Engineer and Engineering Leader, Intel

Nvidia Responds to Google TPU Benchmarking

April 10, 2017

Nvidia highlights strengths of its newest GPU silicon in response to Google's report on the performance and energy advantages of its custom tensor processor. Read more…

By Tiffany Trader

Nvidia’s Mammoth Volta GPU Aims High for AI, HPC

May 10, 2017

At Nvidia's GPU Technology Conference (GTC17) in San Jose, Calif., this morning, CEO Jensen Huang announced the company's much-anticipated Volta architecture a Read more…

By Tiffany Trader

Facebook Open Sources Caffe2; Nvidia, Intel Rush to Optimize

April 18, 2017

From its F8 developer conference in San Jose, Calif., today, Facebook announced Caffe2, a new open-source, cross-platform framework for deep learning. Caffe2 is the successor to Caffe, the deep learning framework developed by Berkeley AI Research and community contributors. Read more…

By Tiffany Trader

Leading Solution Providers

MIT Mathematician Spins Up 220,000-Core Google Compute Cluster

April 21, 2017

On Thursday, Google announced that MIT math professor and computational number theorist Andrew V. Sutherland had set a record for the largest Google Compute Engine (GCE) job. Sutherland ran the massive mathematics workload on 220,000 GCE cores using preemptible virtual machine instances. Read more…

By Tiffany Trader

Google Debuts TPU v2 and will Add to Google Cloud

May 25, 2017

Not long after stirring attention in the deep learning/AI community by revealing the details of its Tensor Processing Unit (TPU), Google last week announced the Read more…

By John Russell

US Supercomputing Leaders Tackle the China Question

March 15, 2017

Joint DOE-NSA report responds to the increased global pressures impacting the competitiveness of U.S. supercomputing. Read more…

By Tiffany Trader

Russian Researchers Claim First Quantum-Safe Blockchain

May 25, 2017

The Russian Quantum Center today announced it has overcome the threat of quantum cryptography by creating the first quantum-safe blockchain, securing cryptocurrencies like Bitcoin, along with classified government communications and other sensitive digital transfers. Read more…

By Doug Black

Groq This: New AI Chips to Give GPUs a Run for Deep Learning Money

April 24, 2017

CPUs and GPUs, move over. Thanks to recent revelations surrounding Google’s new Tensor Processing Unit (TPU), the computing world appears to be on the cusp of Read more…

By Alex Woodie

DOE Supercomputer Achieves Record 45-Qubit Quantum Simulation

April 13, 2017

In order to simulate larger and larger quantum systems and usher in an age of “quantum supremacy,” researchers are stretching the limits of today’s most advanced supercomputers. Read more…

By Tiffany Trader

Messina Update: The US Path to Exascale in 16 Slides

April 26, 2017

Paul Messina, director of the U.S. Exascale Computing Project, provided a wide-ranging review of ECP’s evolving plans last week at the HPC User Forum. Read more…

By John Russell

Knights Landing Processor with Omni-Path Makes Cloud Debut

April 18, 2017

HPC cloud specialist Rescale is partnering with Intel and HPC resource provider R Systems to offer first-ever cloud access to Xeon Phi "Knights Landing" processors. The infrastructure is based on the 68-core Intel Knights Landing processor with integrated Omni-Path fabric (the 7250F Xeon Phi). Read more…

By Tiffany Trader

  • arrow
  • Click Here for More Headlines
  • arrow
Share This