Rackables Adopt and Go Strategy

 
 
By Jeffrey Burt  |  Posted 2009-05-12
 
 
 

Rackable Retains SGI Name


The SGI name will live on, even though Rackable Systems bought the venerable Silicon Valley pioneer.

After completing the $42.5 million deal to acquire SGI May 11, Rackable officials announced that the company will retain the SGI name-with a twist-and that Rackable will become a brand name within the larger company.

For the previous company, SGI stood for Silicon Graphics Inc. With the new company, SGI stands for Silicon Graphics International. That said, the new SGI will keep the old company's Web address and will be referred to as SGI.

The name change took effect May 11, said George Skaff, chief marketing officer at SGI.

Skaff said company officials tossed around many names for the new company-including Rackable Silicon Systems and Rackable Graphics-but decided Silicon Graphics International made the most sense, despite SGI's recent history of poor business decisions, bankruptcy and debt. Rackable was a profitable company with no debt, and the business policies that got the company to this point won't change, he indicated.

"Just because the name is SGI does not mean that our policies are the same as [the old] SGI," Skaff said, noting that SGI as a brand and as a name is still strong throughout the world. "It is known better internationally than Rackable."

In addition, given the broader portfolio that includes products from both Rackable and the old SGI, the name Silicon Graphics International fit better, he said.

Skaff also said the new SGI will keep many executives from the old SGI.

Rackables Adopt and Go Strategy


 

Charles King, an analyst with Pund-IT Research, said retaining the SGI name makes sense, particularly since SGI's problems in the past seemed to be highlighted more within the tech industry than outside.

"Despite the trouble [the old] SGI has had as a company, the brand ... still holds a lot of credibility, particularly in the areas of visualization and high-performance computing," King said. "Not only does the SGI name still have [a] residual legacy [of credibility], but it also allows [Rackable] to move beyond its own legacy of offering data centers in a box and rack-centered systems."

That seems to be the plan. Rackable now is a brand name for the company's x86 cluster computing products, joining other brand names such as Altix and InfiniteStorage from the old SGI and ICE Cube from Rackable.

Now comes the work of bringing the two companies together, Skaff said. He declined to talk about plans for the company over the next few months, pointing out that the bankruptcy judge, upon approving the deal, only gave the companies eight days to close.

Right now officials are going with an "adopt and go" strategy, taking the best of both companies and getting rid of the rest, he said.

The old SGI, once a high-flying tech company that made massive computing systems that sold for millions of dollars, fell on hard times when it couldn't adapt to the changing server landscape, where businesses were buying many small x86 boxes.

In the past few years, the company moved in and out of bankruptcy, and had amassed $526 million in debt when Rackable announced April 1 it was buying SGI.

Rackable officials said there were several reasons for buying the struggling company, pointing to complementary products in the HPC and visualization fields, a stronger international reach, and a loyal customer base.

"From Day One, we become a company with presence in 25 countries," Skaff said, noting that Rackable itself mostly sold in the United States.

He also said customers of the old SGI wanted to continue working with the company, but also wanted more financial stability, which the deal gives them.

"Innovation, expertise and service are at the core of SGI," Mark Barrenechea, CEO of the new SGI, said in a letter to customers posted May 11 on the company's Website. "We built our company by listening to our customers, providing unique solutions for the toughest and most demanding technology and business problems, offering mass customization, and being first to market with new component technology in order for our customers to maintain their competitive advantage. This tradition will continue."

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