SGI shifts focus to lift revenue

By ADAM GIFFORD

Silicon Graphics is looking for new resellers as it tries to rebuild its New Zealand business based on specialised storage and scientific applications.

Accounts just filed with the Companies Office show SGI made a $385,074 profit in the year to June 30, 2003, only the second time in the past six years it has been in the black.

But revenue fell 30 per cent from about $3.65 million to $2.56 million.

This was well short of the company's peak of $14.66 million in 2001, which was boosted by sales to universities and to Weta Digital for post production work on Lord of the Rings.

Australia and New Zealand manager Bill Trestrail said since then the company had shed products such as PCs, where it faced competition from commodity suppliers, and concentrated on areas where it could offer specialised expertise.

"We have changed strategy in the past 18 months and we are starting to see the results," said Trestrail. "There is more of a focus on the scientific marketplace." .

He said New Zealand customers were still mainly in the media, post-production and scientific areas.

In Australia, the customer base was broader, with oil and gas, manufacturing and defence sectors helping SGI achieve 35 per cent annual growth.

"Most of our growth is in high-end storage for complex data," Trestrail said.

"You can build a heterogeneous SAN [storage area network], which you can access directly with a Mac, a Windows PC, a Linux or Unix box."

He said such storage was competitive for applications such as digital broadcasting, and a recent sale was to the Fox Sports network.

"As broadcasters go to digital formats we can add a lot of value in storage and workflow," he said.

While it still made servers with its own MIPS chip running a type of Unix called Irix, much of SGI's attention was now on its Altix Linux server and supercluster lines.

Trestrail said while SGI was under pressure from people building Linux superclusters out of commodity Intel hardware, some applications needed memory at the core.

"When you cluster PCs, you break up memory. While that is OK for a number of applications, a lot of time the system is just doing processor to processor communication rather than processing the data ...

"We are seeing a swing back from clusters to integrated architectures."

Worldwide in the year to June 25, SGI made a loss of US$65 million on operating revenue of US$842 million, compared with a $137 million loss on revenue of $897 million in 2003.

SGI