Back to the Future

It’s all about profit, not about scaling up revenue. It is just about making money and not beating the competition in being the largest revenue-earner.

As (SGI) Silicon Graphics Inc celebrates two decades of its existence in 2002, it is with the candid admission that its ship did go astray at times and that it has ushered in the change agents to steer it back on course. The re-structuring exercise that began 18 months ago is nearing completion and SGI is making a conscious effort to point out that the new SGI has its feet firmly on the ground. Having burnt its fingers in the low - end high volume server business, SGI has severed its ties from operations involving computing for the masses.

Says SGI, senior vice president (marketing) Jan Silverman, “The lesson we have learnt is that users and companies will not ignore the price difference and go in for an SGI product, just because they trust its brand. Adding value to a product is the key to success in the market”.

The focus is now on high performance computing, complex data management and visualization products, services and solutions. And focussing on the high-end also calls for a greater concentration on research and development. Explains the senior vice president Intercontinental Field Operations of SGI, Bill La Rosa, “For the past 10 years, SGI has been investing 10-15% of its annual revenue in research and development This translates into over $ 9 billion of cumulative investment.”

Time to mop up

Just six months ago, SGI reported a loss of $ 141 million and close to a 1000 people left the organization. But moving out from its loss making ventures has paid off. Silverman explains that these ventures were generating volume but incurring losses and it was best to hive them off. Today, the company intends to focus on its core strength – high-end technology for technical and creative users. Silverman points out that the company was criticized for being ‘too narrowly focussed’ during the Internet boom. “But, as a result, our immunity to the slowdown was higher. For even in bad times, engineering departments, which form the core of most companies, were the last to be touched” he explains.

In January 2002, when the company announced its results for the second fiscal quarter that ended on December 28, 2001, the revenue for SGI stood at $ 364 million. This is a 15% sequential growth in product and service revenue from the first quarter. Compared to the $ 176 million for the previous quarter, operating expenses, excluding restructuring and other special charges, were $ 146 million.

SGI Intercontinental (ICON) Field Operations, which incorporates the Asia Pacific and Latin American regions, reported total revenue growth of 75% and total product growth of 125% from Q1. “SGI ICON will build upon these strong results with a continued focus on our core verticals of defense, media, energy, manufacturing and sciences” says Rosa.

The age of the VAN

The company has chalked out a multi-year, multi-product strategy to support the new concept of Visual Area Network (VAN). The use of VAN is based on the concepts of geospatial imaging and universal access. VAN enables remote or mobile users to interact with visualization-supercomputers and to collaborate graphically with globally dispersed teams using any client device. It eliminates the need to replicate data across locations. Doing away with the dissemination of copies of data also means greater security. It could also result in increased ROI (return on investment) as more users have access to
advanced graphic capabilities.

On January 30, this year, SGI launched four new products that support the concept of VAN in Bangkok, Thailand. These include: the Silicon Graphics Fuel Visual Workstation, SGI Onyx 300 with InfiniteReality3 Graphics, the SGI Onyx 3000 series with InfiniteReality3 Graphics and the SGI Onyx 3000 Series with InfinitePerformance Graphics. This entire range of new products is aimed at industries, which require collaborative effort across locations during the work process. For instance, consider a company that has three teams based in different locations working on a single product. The three groups need to interact and discuss the prototype of the product. All three groups could use a visualization system to view high quality and life-size digital images at the same time during the discussion.

The Indian pie

India accounts for just 1% of SGI’s overall revenues but is seen as a key area for growth. SGI India was incorporated in 1993 and has an installation base of more than 5500 workstations and servers. The company has 32 employees in India primarily for marketing and customer support. The company turnover for the year ending June 30, 2001 was Rs 119.99 crore. SGI’s clients in India include Telco, Mahindra and Mahindra, GE-India Technology Centre, BSNL, Doordarshan and the IITs (Indian Institute of Technology) in Chennai, Mumbai, New Delhi and Kanpur. Eenadu Television, Hyderabad recently purchased two SGI Origin 3200 servers with 4 CPUs and 7.2 TB of storage for the TV station’s broadcast automation system. 

SGI also sold a single projection system Reality Center to BHEL (Bharat Heavy Electricals Limited). The Reality Center will be used for design validation, digital prototyping and design collaboration between large teams.

Brand positioning: Back to graphics

“Silicon is our first name and Graphics is our second” says Bill La Rosa. But in an attempt to shed its ‘graphics’ only image and position itself in servers, the company had been promoting the ‘SGI brand’ instead. However, it has now realized that the attempt to stay away from the strong brand that ‘Silicon Graphics’ is, is actually a mistake. So, along with the restructuring has begun a subtle movement to leverage on the brand value of the company’s original name.

Being the fifth-largest company in the world, in terms of revenue, SGI had entered the fray in scaling higher peaks in this area. But this has now been traded for a focus on profits gained mainly from revenues of its products in the high-end segment. As Jan Silverman puts it, “We’d rather be like the Ferrari in the automobile industry, selling high-end products to niche customers rather than chase numbers by pushing revenue growth”. 

Manjiri Kalghatgi in Bangkok

SGI’s Visualization Products

OpenGL Vizserver 2.0 software enables users to access and manipulate high-quality visual results generated by the SGI Onyx 3000 series visualization systems. 

Application I: Modern scientific research is an increasingly collaborative effort. Within campuses, different departments and even different institutes need to combine resources to gain access to the most powerful platforms. OpenGL Vizserver brings visualization back to the professors’ office by transporting imagery describing extensive results to existing desktops 

Onyx 3000 visualization system series with Infinite Performance graphics subsystem: Its key features include speed in interactive graphics performance with high image quality, flexibility and affordability. It offers flexibility by supporting multiple independent users, high-performance users, group decision making in an SGI Reality Center visualization facility environment and collaboration in a Visual Area Network environment.

Application II: In the energy segment, the SGI Onyx 3000 series with Infinite Performance graphics combined with OpenGL Vizserver computing solution delivers cost-effective visual serving of exploration and reservoir-management visualization direct to end-user desktops. Users working in their offices or from remote locations on drilling platforms can interact with data sets to make timely drilling and management decisions with supercomputer performance.

Silicon Graphics Fuel visual workstation is designed to maximize the performance of desktop applications while offering price/performance value. The Silicon Graphics Fuel visual workstation’s ability to generate volume rendering to represent densities and temperatures, while preserving image integrity with 12-bit data paths is crucial for medical imaging applications.

SGI Onyx 300 visualization system with Infinite Reality graphics delivers cost-effective, scalable visualization capabilities for a number of applications in industries that require stunning realism and interactivity.