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SGI to spill beans on new strategy

Restructure announcement due Tuesday

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Updated SGI is about to undergo its second restructure in less than a year following a meeting on Tuesday in which company execs will outline their latest business strategy. Such a move would have come as no surprise earlier this year when SGI admitted CEO Rick Belluzzo's recover programme wasn't going quite as smoothly as anticipated. Back in April, the company was still haemorrhaging money, though Belluzzo had managed to staunch the flow somewhat, and its revenues were still heading down. Then, last month, SGI announced its first profit in ages, on increased revenue. Its net income was boosted by the sale of some of its MIPS shares, but it was still in the black even if that additional income is ignored. So what will Belluzzo and co (quite a few of them fellow ex-HPers) announce next week? It's likely to be evolutionary change rather than a revolutionary one. SGI bosses have already admitted their attempts to push into the Windows NT workstation market hasn't been entirely successful. That plan was always little more than an extension of what SGI had already been doing -- what's needed now are moves into other markets. The template here is Apple and its shift towards the consumer arena. That's not to say SGI will make the same move, but it's certainly the kind of market the company needs to thinking about. Ironically, it has got close to that market before, thanks to its early work with Nintendo on the N64 console's graphics engine. At the time, though, SGI -- or Silicon Graphics, as it was then -- was highly snobbish about such 'trivial' applications and effectively allowed the Nintendo relationship to wither away. Nintendo's next-generation console, codename Dolphin, is being co-designed with a team of ex-SGI graphics guys. Still, the expertise is there, and SGI's recent rapprochement with games graphics specialist nVidia may well signal some interesting moves ahead. Indeed, we've since learned that SGI has been moving staff from its mid-range graphics operations over to nVidia. Certainly, giving its graphics expertise to nVidia would make sense as part of SGI's erstwhile patent action against the company, particularly given its interest in moving away from its graphics heritage. Meanwhile, many pundits have predicted SGI will flog off Cray, which it bought in 1996 for $576 million. Stressing SGI's support for Linux is also likely to be part of the meeting. Linux provides SGI with a way into the wider business server market, especially now it has dropped the 'Silicon Graphics' name and can begin to try to persuade more mainstream users that its products aren't solely for the creative computing arena. In fact, that has to be central to whatever SGI does from here on. Telling everyone you're name has changed is one thing -- getting out there and stressing that change of focus is something else, and that's where SGI really does need to develop its strategy. ®

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