In Business This Week

NEW DIMENSIONS FOR SILICON GRAPHICS

For years, Silicon Graphics has quietly labored in an obscure corner of the workstation industry--computers that allow industrial designers and engineers to model designs in three dimensions. But on Apr. 2 and 3, the company announced two alliances that may vault it to the forefront of the computer industry.

For one, Microsoft said it will make SGI's graphics software part of its operating systems, so even personal computers will be able to do 3-D graphics. And Compaq Computer will buy 13% of the company for $135 million and invest $50 million more to design a next-generation hybrid of PC and workstation. One risk for SGI: By licensing its technology more widely, it could create potent competitors. Moreover, it's finally feeling the recession: It just announced earnings will drop substantially in the third quarter ended Mar. 31.EDITED BY HARRIS COLLINGWOOD