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Cray celebrates Opteron joy

Can the good feelings last?

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SC05 Cray has earned the right to gloat. The supercomputer maker picked AMD's Opteron chip as its horse early on and can now revel in the market adoration for the product. But while interest in Cray's systems has shot up as a result of its new Opteron gear, huge questions remain as to whether or not Cray can turn around its business in a meaningful way.

"Last year at Supercomputing, we had just launched the XD1 and were talking about the XT3 and basically talking about our architecture," said Amar Shan, a product manager with Cray, in an interview at this year's Supercomputing conference. "This year we have the products going well and all the success stories to point to. Product managers get to sit back with a smile on their face."

Cray attributes much of its good fortune to taking the Opteron risk and betting on the chip when it was unproven in the wider server market. Backing up its commitment to Opteron, Cray this week said it will continue to use the chip through 2010. In addition, it will present AMD-based systems as the core of its proposal for DARPA's lucrative High Productivity Computing Systems contract, which will be awarded next year to either Cray, Sun Microsystems or IBM.

"At the moment, it is not any secret that Intel's Xeon has to play catch up," Shan said. "Intel does have a lot of resources, and we know that they will catch up, but we also know that AMD has a very compelling roadmap and a product well-suited to high-performance computing."

Cray's XT3 Opteron-based Red Storm cluster currently claims the number six spot on the Top500 supercomputer list. It boasts more than 10,880 processors and is the leading Opteron-based system in the supercomputer world. The company has also claimed recent wins with PING, the Korea Meteorological Administration and Rice University. Such wins outside of Cray's core US government business prove crucial to its overall viability.

In its most recent quarter (Q3), Cray posted revenue of $44.7m, which was flat year-over-year. Its net loss, however, shrank dramatically to $10.3 from $111m the previous year. In its second quarter, Cray reported revenue of $53.4m – a large surge over the $21.7m in the year earlier second quarter.

Still, Cray depends on US government contracts for the majority of its sales. The business model is restrictive, especially for a public company under huge pressure to grow.

Cray maintains that government organizations now need its class of supercomputers more than ever for jobs outside of the defense and intelligence domains. It points to weather modeling, bio-medical research and more general environmental modeling as key tasks.

"I do think the government funding will be there, and there are plenty of other opportunities as well," Shan said. "There are lots of friendly nations to sell to."

As for what's next at Cray, the company has moved from a spider-themed code-naming scheme for its systems to one centered around mountains. Adams, Baker and Hood are all future product names, although Shan declined to provide any details on the systems.

Overall, Cray has done a better job of late of keeping costs in line with its business, and it has a solid product lineup that makes use of commodity parts where possible and proprietary bits to boost total performance. Cray may even be profitable once again in the fourth quarter, a spokesman said. Still, one has the feeling at times that Cray, like SGI, will be stuck in a declining market, while Tier 1 server vendors and a fleet of upstarts try to eat away at parts of its business. It's tough times for the venerable computing crowd. ®

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