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division to build and sell new lines of PC-compatible graphics boards

and software, as well as to attempt to build on the success of its Nintendo

64 game machine. At the higher levels of its market, SGI continues to

provide more for less to its big institutional customers.

Most significant in the latter respect has been SGI’s

purchase of Cray Research, the world’s

leading manufacturer of supercomputers, for $767 million. Prior to the

merger, the two companies together owned almost half of the $2 billion

scientific and engineering market. SGI hopes economies of scale and the

melding of the two company’s technologies will help lower the cost

of supercomputing power, enabling the company to broaden its market for

mid-level professional applications. Although company spokesmen do not

expect to realize the full benefits from the integration of the technological

standards of the two companies until around the turn of the century, SGI

has already used Cray’s crossbar switch technology — a system that

facilities rapid connections between memory, central processors, graphics

devices and peripherals — to increase the performance of their new midrange

Octane workstations. At the same time SGI is slashing the prices of their

low-end O2 systems, which have become the fastest-selling products in

the company’s history.

Supercomputers like the Origin 2000, only recently believed

to be an endangered species, are presently finding new markets at universities,

in manufacturing such as applications for automobile and aerospace plants,

in oil and gas exploration, and in weather forecasting. The rapid growth

of Asian economies has created an additional market for many of these

applications. SGI and its Cray subsidiary maintain a firm hold on their

share of the highest-end supercomputer market. The company has recently

sold three Cray systems to the Department of Defense Naval

Oceanographic Office, and in October of 1996 sold what was then the

world’s most powerful supercomputer to Los Alamos National Laboratory,

where it will be used to develop a simulated substitute for underground

nuclear testing.

SGI has additionally built an emerging business providing

computers to be used as servers for corporate intranets. In the rapidly

growing intranet market, the company expects to gain a significant advantage

during the next few years from the integration of Cray’s parallel

processing technology.

Conclusion

Following a decade of constant innovation and growth,

Silicon Graphics continues to produce some of the world’s most advanced

computers in every category except that of the personal computer.

Having committed the greater part of its resources to

continued domination of the high end of computing, SGI’s success

in the coming years depends not only on staying ahead of its competition,

but also on the power of the global economy to find new uses and needs

for the power premium SGI’s high-level workstations offer. Considering

the rate at which technologies have been developed and put to use in recent

years, this seems a plausible, if not a certain, scenario.

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