Cray Targets New Markets with OctigaBay Acquisition

Supercomputer manufacturer Cray is looking to expand its target market with its Wednesday acquisition of start-up OctigaBay. The move will expand the company's product line and let it compete against HP, IBM and Sun.

Supercomputer manufacturer Cray Inc. is looking to expand its target market with the acquisition of start-up OctigaBay Corp.

Cray announced on Wednesday a deal to buy the Vancouver-based company for about $115 million. The acquisition is another step in Crays push to branch out in the commercial world of supercomputers. In October 2003, the Seattle company announced it was productizing its Red Storm supercomputer, a 40 teraflop system that it has been developing for Sandia National Laboratories.

In November, OctigaBay unveiled its OctigaBay 12K, a Linux-based high-performance computing platform powered by Advanced Micro Devices Inc.s 64-bit Opteron chip.

The technology, which wont begin to ship until the second half of 2004 in initial releases and generally until early 2005, is designed to increase the performance and remove bottlenecks in HPC systems by embedding a high-speed interconnect called RapidArray Interconnect and communications processors. The technology also offers self-healing and management features.

Cray officials expect the combination of the OctigaBay and the commercialization of the Red Storm systems will enable it to expand its target market more than four times.

"Its going to increase Crays addressable market and accelerate its revenue growth," said spokesman Steve Conway.

Currently Cray offers one product, the Cray X1, to the high-end segment of the supercomputer space, about a $2 billion market where Cray systems sell for between $1 million and $100 million, Conway said. The primary users are scientists and engineers doing such tasks as modeling and simulation.

When the company beings to sell the Red Storm systems commercially in the second half of the year, it will enable the company to play in the next level down, which is about a $4.7 billion space.

The addition of OctigaBays technology will enable Cray to drop the prices on its systems even more151some to less than $100,000151and offer smaller computers with as few as 12 processors, enabling it to compete for business that normally would go to such vendors as IBM, Hewlett-Packard Co. and Sun Microsystems Inc.

The difference, Conway said, is that the Cray architecture, with the OctigaBay technology, will be significantly different than what the other OEMs offer, giving customers a choice not only in price but technology. Officials expect the deal, which has been approved by the boards of both companies, to close within 60 days.

The Red Storm supercomputer being developed for Sandia151it will be operational in the second half of the year151is a $93 million system that will be powered by 10,368 Opteron chips, Conway said.

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