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OMG: HPE gobbles SGI for HPC. WTF?

Biz once valued at billions bought for $275m in three-letter mergasm

Hewlett Packard Enterprise has bought venerable computing firm SGI – formerly Silicon Graphics – for $275m.

Over the past few years, SGI has concentrated on the big-iron end of the server market and high-performance computing. It's this technology that HPE wants to bolster its hardware lineup.

"At HPE, we are focused on empowering data-driven organizations," said Antonio Neri, general manager of HPE's enterprise group, on Thursday.

"SGI's innovative technologies and services, including its best-in-class big data analytics and high-performance computing solutions, complement HPE's proven data center solutions designed to create business insight and accelerate time to value for customers."

SGI, which made millions in the 1990s with its pioneering workstations, has been in decline for well over a decade. Its MIPS-based workstations were the darlings of the entertainment industry in particular, starring in a generation of films such as Jurassic Park – which featured SGI systems behind and in front of the camera – as well as Terminator 2, Men in Black, Forrest Gump, and so on.

SGI sold gear into other industries, too, and to the military; it came up with the 3D graphics API OpenGL, which is still used just about everywhere today; it ported UNIX System V to MIPS, calling the resulting operating system IRIX; and it was responsible for the GPU in the Nintendo 64.

After getting caught out by the rise of low-cost x86 clusters, SGI languished, and its own Intel workstations built in response were shunned by the industry. It got caught out moving to Chipzilla's ill-fated Itanium processors before shifting to Xeon parts, and went through two bankruptcy motions before being bought by Rackable Systems in 2009 for $42.5m.

"Our HPC and high-performance data technologies and analytic capabilities, based on a 30+ year legacy of innovation, complement HPE's industry-leading enterprise solutions. This combination addresses today's complex business problems that require applying data analytics and tools to securely process vast amounts of data," said Jorge Titinger, CEO and president of SGI.

"The computing power that our solutions deliver can interpret this data to give customers quicker and more actionable insights. Together, HPE and SGI will offer one of the most comprehensive suites of solutions in the industry, which can be brought to market more effectively through HPE's global reach."

Or at least, that's what both sides are hoping. HPE paid $7.75 per SGI share to acquire the company, a 30 per cent premium on its stock price at the close of the market.

SGI's total revenue for the 12 months to June 24 this year was $533m, up from $521m a year ago. It made a net loss of $11.1m, which is better than the $39m it lost the year before. Its operating costs nudged up to $168.7m from $145.6m due to overheads from rising sales, marketing and general admin.

"SGI, the victim of a cash cow business selling to military and the biggest companies in the world, never made a transition to PC graphics. It could have been Nvidia. Instead, it’s now a footnote," El Reg columnist and VRML co-inventor Mark Pesce blogged earlier today.

"This is a sad day, because without SGI, much of modern VR simply wouldn’t exist. They paid for a lot of pioneering research work — yes, in order to sell more systems, but nonetheless they paid for the infrastructure that people still use today – such as OpenGL – to create virtual worlds." ®

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