Linux Cluster Vendor Penguin Making Its Move

When Charles Wuischpard came to Penguin Computing in January 2007 as president of worldwide field operations, he found a company that lacked focus, had stagnant financials and was trying to serve too many markets.

In the two years since, Wuischpard—now president and CEO—has refocused the company primarily on the HPC (high-performance computing) space, paring the bulk of its general Linux computing business—though keeping some loyal Web customers—and reducing expenses.

The result has been steady growth over the past two years, with revenues up 50 to 60 percent and expenses cut almost in half, he said.

“Really, 2008 was the best year in our [11-year] history,” Wuischpard said in a recent interview.

Now, with the business where he wants it to be, Wuischpard said he is looking to take the tarp off the new and improved Penguin. The company plans to make several announcements over the coming weeks highlighting such advances as new on-demand computing capabilities, and also is looking to grow through acquisitions, if possible, he said.

The company also wants to take advantage of such market trends as consolidation, virtualization and customer demands for more compute capabilities for less money.

Penguin, which makes Linux-based clusters and specializes in cluster virtualization, aims to reduce the complexity and cost of running clusters by combining open-source software, industry-standard components and virtualization technology. The company uses its own Scyld Clusterware to make large pools of Linux-based servers work like a single virtualized system, managed from a single point.

The systems are powered by x86 chips from Intel and Advanced Micro Devices. Most recently, Penguin March 30 rolled out three new Relion 1700 Series systems powered by Intel’s new Xeon 5500 series chips, also known as Nehalem EP.

Within the next few weeks, Penguin will announce a new on-demand computing capability for its HPC customers. The company is building a large system in Utah targeted at memory-intensive HPC workloads, complete with InfiniBand-based networking.

“Everything will be tuned to really run any workload you can imagine,” Wuischpard said.

He is aiming to sell access to the on-demand system combined with Penguin cluster systems, and can see leveraging free time on the on-demand system as an enticement to buy Penguin solutions.

“People never want to do just on-demand [computing], and they don’t want to spend the money to do it all in-house,” Wuischpard said. “In one proposal [with Penguin], they get both.”

He also said he is interested in growing the company, both from within and through other companies.

“We are actively shopping around for acquisitions, and we have retained [a financial institution] to help us with that,” Wuischpard said.

He said that Penguin had investigated rival HPC systems maker SGI before Rackable Systems announced April 1 it was buying the former Silicon Valley superstar for $25 million.

“We really eyeballed that company,” Wuischpard said.

What made him leery of the deal was the idea of taking on SGI’s liabilities. In bankruptcy papers filed by SGI, the company had assets of $390 million but debts of $526 million.

However, the consolidation in the market illustrated by the Rackable-SGI deal, as well as the more recent announcement that Oracle is buying Sun Microsystems for $7.4 billion—after the rumors of IBM being interested in Sun—opens up the playing field for Penguin, Wuischpard said.

“All of that is creating opportunity for us,” he said.

A key to that opportunity is the demand by IT departments and researchers for greater performance from their computing environments at lower costs. Wuischpard said the bulk of the solutions Penguin sells cost less than $1 million, and the company recently sold a system for $187,000 that offered enough performance that it would have been placed on the Top 500 list of the world’s most powerful supercomputers only a few years ago. Components like Intel’s Nehalem EP chips only increases the capability of building powerful systems at lower costs.

“That’s bringing a kind of power to a part of the market that it couldn’t have gotten a few years ago,” he said. “The pace of technology is enabling people who never could have gotten hold of such power until now.”

The rise of personal supercomputers is allowing people to get as much as 4 terabytes of power in systems that fit under their desk for less than $10,000.

“We’re getting a big uptake in interest in this area,” Wuischpard said.