Silicon Graphics to Buy Cray for $752 Million
The era of the supercomputer is fading.
Silicon Graphics Inc., the Mountain View, Calif., manufacturer of 3-D workstations, announced Monday that it will acquire Cray Research Inc., the last of the supercomputer companies. Cray, the inventor of the computer engineering marvels, will lose its independence.
Silicon Graphics agreed to purchase Cray for $752 million, a relatively modest premium over its market value of $644.4 million. Silicon Graphics promised that the Cray name, synonymous with technical superiority, will live on, although it will be a diminished version of the Eagan, Minn., company that survives.
Most of Cray’s competitors have disappeared altogether as the government money that helped underwrite design costs evaporated with the end of the Cold War. The universities, government agencies and national research laboratories also saw their government money begin to dry up and were unable to buy supercomputers with price tags of $5 million and more.
The demise of the supercomputer companies has been seen coming for a long time: “Today’s personal computer is the supercomputer of yesterday,” computer scientist Jim Gray said. “The sad thing about this is that these people built really astonishing machines.”
Blinded by the profits of their mainframe and minicomputers, once dominant companies like IBM Corp. and Digital Equipment Corp. also stumbled as clusters of smaller computer tackled the jobs previously done on the big machines.
“If I can point to one mistake that Cray made it was not developing smaller, less expensive machines,” said Gary Smaby, president of the Smaby Group, a Minneapolis market research firm.
In the case of the supercomputer companies, that error in judgment coincided with tighter government funding.
Steve S. Chen, a talented supercomputer designer with the ambitious goal of building the world’s fastest computer, shut down his company, Supercomputer Systems Inc., in January 1993 after running out of money. IBM had initially funded the former Cray Research engineer, but slow progress made it decide to stop funding the project.
Thinking Machines Corp. filed for bankruptcy in August 1994 after a deal to sell the Cambridge, Mass., company fell through. Started by a group of Massachusetts Institute of Technology students in 1984, Thinking Machines pioneered massively parallel processing, a design method that calls for linking hundreds, even thousands, of inexpensive microprocessors--the engine of any personal computer--into what it hoped would be a cheaper version of the traditional supercomputer. Kendall Square Research Corp., started by flamboyant entrepreneur and America’s Cup winner William Koch, was also unable to popularize a massively parallel processing machine.
Perhaps the most dramatic failure was that of Seymour Cray, the legendary computer designer, who invented the first supercomputer at Control Data Corp., which he founded, before going on to start Cray Research. Cray saw his most recent venture, Cray Computer Corp., fail last March. Cray also wanted to build a more powerful computer than had ever existed before, but ran out of money--he had $100 million from Cray Research--before his machine was complete.
Supercomputer makers struggled to find ways to bring prices down. Massively parallel processing wasn’t able to achieve the performance. Supercomputer makers turned to CMOS, a semiconductor technology that produces computers that consume less power and are therefore cheaper.
But the market for supercomputers grew smaller, nonetheless, as increasingly more powerful--and far less expensive machines from companies like Silicon Graphics, Sun Microsystems Inc., and Intel Corp.--became available.
Despite that, Silicon Graphics Chairman Ed McCracken on Monday called Cray “a national treasure.” And indeed Cray will supply SGI with cutting-edge technology that it can eventually use in its workstation products.
Although workstations have eroded Cray’s market, computer scientists said there are certain problems that can only be solved by these Ferraris of computing. Oil companies continue to buy supercomputers to determine the best places to drill.
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The Squeeze on Cray
Cray Research Inc., set to be acquired by Silicon Graphics Inc., was the last survivor of the supercomputer industry’s shakeout. Cray earnings over the last decade, in millions of dollars:
1995: -226.4
Sources: Bloomberg Business News, Associated Press
Researched by JENNIFER OLDHAM / Los Angeles Times
