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Once Billion dollar Company SGI Sold to Rackable for only $25 Million

Submitted by on 26 November, 2013 – 12:32 pm

A collective shudder rippled thru Silicon Valley on Wed. morning, as Rackable Systems said its acquisition of Silicon Graphics Inc for just $25 million in readies. If you travel all of the way back to 1997, SGI was pulling in close to $4 bill in cash a year.

The company produced some of the flashiest PCs in the world for handling troublesome graphics roles. SGI was another big thing in Silicon Valley, and folk liked the company. For some point of view, think about this sentence from a 1998 story in The Times. Though Silicon Graphics isn’t considered a technology bellwether like Intel or Compaq, it was once one of the state’s fastest-growing corporations, famous for building unusual computers that helped create CGI effects for the “Jurassic Park” films.

Terms like “bellwether” and “fastest-growing” have not been used anywhere close to the SGI name for years. The company used to prosper by selling PCs based mostly on its own chips and operating system. Such technology was undercut by less expensive graphics products from corporations like Nvidia and less expensive conventional chips from Intel. In addition, SGI made a blunder by opting to move all of its computers over to Intel’s unsatisfactory Itanium chip. SGI was forced into bankruptcy 2 years back and has been struggling ever since. ( The company recounted applied for bankruptcy once more on Wed. morning just before exhibiting the Rackable deal. ). Rackable kind of resembles SGI, in that it used to be another big thing in company hardware too. As I reported earlier in the week, Rackable was a shining star in 2006 before Dell started putting major pricing pressure on the pretender, fighting it for patrons like Facebook, Microsoft and Yahoo.

By purchasing SGI, Rackable takes on some engineers with experience in building huge, complex systems as well as some intellectual property around graphics and server technology.

( Regrettably for SGI, the company sold off some its key 3-D graphics technology to Microsoft earlier this decade. ). Whilst SGI has had a meeting with an unceremonious end, one of its founders has a new beginning. The company was started in 1982 by former Stanford Varsity professor James Clark, who went on to create Netscape Communications ( since we’re going down memory lane ).

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