Following worrying first quarter results, Silicon Graphics Inc has revealed further details of its plan to reorganize the company, shifting its strategy away from the high-end graphics field to target the European telecommunications, media and enterprise server markets (CI No 3,277). SGI reported a first quarter loss of $56m compared with a $22m deficit at the same time last year, on revenue down 0.4% to $620.6m, and warned on publication that it would looking to make changes in an attempt to get the company back on track. To make the shift official the company has expanded its Advanced Manufacturing and Technology Center, a high-end manufacturing facility in Switzerland, and opened the doors on a Solutions Center, the first of its kind worldwide. The center, a testing, benchmarking, development facility, features demonstrations of decision support systems, customer care, finance and billing, data management, electronic commerce, web media streaming, video serving and digital asset management applications. Among the network and internet technologies developed by SGI and its business partners special attention is given to high-performance media streaming over the internet, the company says. The company expects to announce the center’s first customer for this solution soon. To date SGI sales of Unix servers to telecommunications and media companies account for 32% of the company’s European business and the hope is to grow that share significantly. Our strategy has changed and we have identified an important fast-growing market which is the market for the strategic business analysis server, says Bob Bishop, Chairman of the Silicon Graphics World Trade Corporation. The demand for these systems, which allow customers to analyze customers and serve them online, is growing at an annual rate of 20%, the company estimates.
ERP and Product Data Management
SGI also hopes that sales of systems will increase thanks to the speedy integration of Enterprise Resource Planning and Product Data Management applications from partner vendors such as Baan Co NV. Altogether the shift in strategy to machines and applications that handle Big Data should allow the company to get out of its present rut and complete its transition on time and according to expectation, Bishop says. He said that the company will be profitable in fiscal ’98 because restructuring measures will allow the company to reduce its operating expense by $37m, covering the losses which it reported for the first quarter. Revenues year on year, however, will remain flat. With cash equivalents on the last balance sheet amounting to $657m, Bishop said the company is not in financial stress to make the transition. One smart move the company has made is to throw its weight behind NT-Pentium. SGI, which said it is gaining share in the shrinking Unix workstation market, underlined its support for the NT-Pentium platform but stressed that its interest as a supplier does not extend beyond the workstation space to the server market. The company has yet to decide whether it will OEM the Pentium machines or whether it will provide its added-value to another company for integration. In 1998 we intend to embrace NT product world. Our intention to add value to those products in parallel to our own products, Bishop says. Our entire focus is on Unix and Windows NT will play a limited role in the server space as long as it is not 64 bit.
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