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SGI to spin off Cray, NT workstation biz, graphics expertise

Sell-offs to eliminate 1000-1500 jobs, streamline company for Net-oriented future, says CEO

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SGI today unveiled a radical plan to pursue long-term growth and sustainable profitability centring on flogging off large chunks of the company. Not that that's how SGI puts it, but nevertheless that's clearly where the strategy will take it. Heading the list of divested divisions is the company Windows NT workstation line, closely followed by its Cray division. Getting rid of the latter had widely been predicted to be high on CEO Rick Belluzzo's list of priorities, but ditching the NT stuff was not anticipated, even though it shouldn't come as much of a surprise. SGI officials have been saying of late how the company's attempt to break into the Windows workstation market didn't go according to plan, partly through production problems and partly because most buyers of Windows workstations don't want groovy-looking kit aimed at creative types. And then there's SGI's new-found fascination with Linux. The company really doesn't have the resources to develop its technology on three OS platforms -- Linux, Irix (its own variety of Unix) and Windows NT -- so one has to go. Since ditching Irix would leave it without a solid OS for its high-end server line and since Linux is free, well, sorry, Microsoft, we don't love you anymore. The upshot is that SGI will form a joint venture with an unnamed hardware company to develop and distribute the NT line. If it can be made to work, great, SGI will make something on the deal -- if not, it can easily sell its share of the JV at a later date. The Cray business, meanwhile, will be effectively spun off until a buyer can be found -- SGI said it is already in talks with a number of possible partners to take over the operation of the business. SGI also plans to spin off its MediaBase media streaming technology and development team into a separate company. Actually, this sounds more like an opportunistic MBO in the face of closure -- the new company is being funded by venture capital, which SGI walks off with a minority stake. MediaBase has a long way to go to catch up with rival streaming players like Apple, Microsoft and, in particular, RealNetworks, SGI was probably glad to be rid of the division, and may well have been planning to shut it down completely. Next on Belluzzo's list of Things to Restructure comes SGI's relationship with 3D graphics company nVidia. Since the two firms sorted out their differences over alleged patent infringements, they have agreed to co-operate on the development of their respective technologies. In practice, that means SGI's graphics engineers will move over to nVidia -- neatly trimming its payroll; in fact, the company said it expects to eliminate 1000-1500 jobs through this and its other moves -- in return for SGI's agreement to build nVidia TNT chip-sets into "new desktop graphics systems". nVidia also gets to use all those lovely SGI graphics patents, which can't help but strengthen its hand as it battles the likes of 3dfx, S3 and ATI. For SGI, the move allows it to continue to promote its strengths in the computer graphics field, but without actually having to do any serious R&D -- that's nVidia's job, now. However, SGI will presumably retain control of OpenGL. The final part of the restructure centres on the vague statement that the company will create "a business unit targeted at emerging opportunities for broadband Internet systems". That perhaps ties in neatly with the aforementioned "desktop graphics systems", and suggests it's doing a Sun: expanding out of its high-end server business into wider, Net-based hardware sectors. Sun is doing it with a combination of Java and its upcoming multimedia-oriented MAJC platform; SGI, at this stage, appears to be looking to use nVidia-based Internet access boxes. ®

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