Prime to Sell Minisupercomputers : Also, Computervision Agrees to Discuss Takeover Bid
Prime Computer became the first major computer manufacturer Monday to enter the increasingly crowded market for minisupercomputers, the relatively low-cost machines that work much like the supercomputers used by scientists and engineers.
The Natick, Mass.-based company announced its entry into the $250-million to $350-million annual market for minisupercomputers the same day it apparently made significant gains in its hostile takeover bid for control of Computervision Corp.
On Monday, Computervision’s board reversed course and agreed to meet with representatives of Prime Computer after legal attempts to block the acquisition attempt failed and, analysts said, after the company could not find a friendly buyer.
If Prime Computer is successful with its $435-million offer for Bedford, Mass.-based Computervision, the merger would create the second-largest maker of systems for computer-aided design and manufacturing, also known as CAD/CAM. Together, the companies would hold about 16% of the $4.4-billion world market. International Business Machines is the international leader.
It is the CAD/CAM customers that Prime Computer expects to target for sales of its MXCL 5 minisupercomputer, a machine built for Prime by Cydrome Inc. of Milpitas, Calif. The new minisupercomputer will sell for $579,000, compared to more powerful and flexible supercomputers that normally sell for $8 million to $15 million.
The MXCL 5 is considerably faster than the minisupercomputers of market leaders Alliant Computer Systems of Littleton, Mass., and industry pioneer Convex Computer of Richardson, Tex.
“On paper it looks very good,” said analyst Jeffrey Canin of Hambrecht & Quist in San Francisco. “But it’s not a revolutionary product. It’s not breaking away from the pack.”
In fact, analysts say both Alliant and Convex are expected to unveil new, faster systems soon. A number of other companies also make minisupercomputers, and some analysts are predicting a shakeout in coming months that will reduce the number of competitors. The market, only three years old, already is suffering from intense price competition.
Canin, however, predicted that the Prime-Cydrome system “will be one of the survivors.” He said that Prime’s aggressive pricing--about $200,000 below the anticipated price--should help its strategy to capture market share.
Prime Computer owns 20% of Cydrome, and both companies will market the MXCL 5 under separate labels. Prime Computer will have exclusive international marketing rights, however, as well as exclusive rights to North American financial and manufacturing customers, about 25% of the market.
The worldwide minisupercomputer market is expected to grow to $1 billion by 1991, according to analysts at Hambrecht & Quist.
