Blog Post

Silicon Graphics Being Sold To Rackable For Peanuts

Earlier this month, Jim Clark, the 65-year-old maverick entrepreneur well known for starting companies such as Netscape and Healtheon, tied the knot with 28-year-old Australian supermodel Kristy Hinze. The odd coupling mirrors today’s strange agreed-upon wedding of Clark’s first major company, Silicon Graphics (s SGI) and the little-known server-making upstart Rackable Systems (s RACK). SGI filed for bankruptcy and was agreed to be sold to Rackable for $25 million.

As a beat reporter, I covered SGI pretty closely. I remember the company’s foray into the “Information Superhighway” and how its coolest-looking machines helped create Steven Spielberg’s “Jurassic Park.” SGI was cool, in an Apple (s AAPL) sort of a way. It had some of the smartest engineers and had a feeling of counterculture, which has slowly vanished from the Valley. I remember writing about the company giving up on its own version of UNIX and adopting Windows NT (s MSFT).

A series of management blunders and teutonic tectonic shifts in the technology landscape turned this once proud bastion of engineering into a historical footnote. And, as of today, even that is no more.

20 Responses to “Silicon Graphics Being Sold To Rackable For Peanuts”

  1. Krishna Baidya

    looks like ….. even good thing had to come to a stop. It hurts to see something with such great product soon gets lost in the dust.

  2. Aaron deMello

    End of an era. A touch sad, actually. I started my first company in 1995 with $75k in SGI equipment. Btw, Om – my understanding is that they are walking away from most of the ~$500M+ in debt.

  3. Hmm, I would have thought that Sun, or even Stratus Technologies would have thought of acquiring them, for what it’s worth. Although I don’t know what redeeming qualities they have, these days (other than their brand, a legacy, and a few HPC products)…

  4. I remember when the first workstations arrived in England during the early 80s. Then the main players were HP, SUN, SGI and DEC. At the time I was working for BP Research and remember the delight of the chemical engineers when they started to develop graphical applications to run on SGI workstations. Given the status SGI had at the time it’s hard to believe that the company is no more.

  5. Thomas

    Looks like a smart move on Rackable’s part. Getting >$350MM/yr in sales. If they can replace SGI’s CoGS with Rackable HW and elim a great deal of SG&A, then they’ll probably change the profitability profile of the deal dramatically. Plus, gives them a big position in HPC and potentially Cloud.

      • Thomas

        They’re actually not going to assume *all* of the debt. Saw a note somewhere that they’re only picking up a portion. Not sure how that works when you’re giving equity value…

  6. I seem to recall around the time SGI was starting to release windows machines ( around ’97-’98 IIRC ) they were suffering a brain drain of 3D engineers. I believe many ended up at Nvida, which then produced the first geforce chip in ’99.