The end is nigh for SGI, who's next?

Stan Beer
Tuesday, 09 May 2006 16:33

Your IT - Home IT

The end is nigh for high-end workstation manufacturer Silicon Graphics as the company filed for Chapter 11 bankruptcy protection yesterday. It is news that will sadden a lot of people besides the SGI shareholders, creditors and the 1800 employees globally who will be directly affected. SGI is renowned as one the great innovators in the area of computer graphics and a provider of top quality hardware.

SGI had appeared to be in trouble for some time before the latest announcment. Two months ago, facing declining revenues, the company made a commitment to cut costs and announced dramatic across the board job cuts.

However, faced with stiff competition from the big hardware players plus plummeting prices due to Moore's Law and the commoditisation of hardware, SGI found itself between a rock and a hard place. Hollywood studios which once required the superior graphics processing capabilities of high-end SGI workstations, found that they could achieve similar effects on much cheaper Intel boxes.

So now the once great computer hardware manufacturer from Silicon Valley looks like it's going to depart into the history books like other great manufacturers of high quality hardware such as Digital Equipment and Tandem. Unfortunately for SGI shareholders though, they won't receive the benefit of being bought out by another IT player. As computer hardware becomes increasingly commoditised and margins keep getting thinner, the question remains: who's next?