R.I.P. SGI?

Posted by: Rob Hof on May 8, 2006

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Yeesh, 7 cents a share. How far Silicon Graphics has fallen—now, to Chapter 11 bankruptcy. In its early 1990s heyday, it was as hot as Google (many of whose employees work in former SGI buildings) is today. Just a couple years later, suddenly it wasn’t.

I haven’t closely followed SGI for many years now, but I guess the big picture isn’t too hard to figure out: It kept catering more and more to its best-paying customers—and as Harvard’s Clayton Christensen has often pointed out, that can blind a company to disruptive innovations. In this case, that was the lowly personal computer—or maybe soon, the cell phone.

SGI cofounder Jim Clark understood this, which is why he urged the company to create a cheap interactive TV device to get SGI’s technology to the masses. Maybe that wasn’t the best timing, but he had the right idea. It’s too bad for SGI that its management didn’t heed his instincts. Given that he soon started Netscape and kicked off the Internet era, it didn’t turn out so bad for the rest of us. But I’ve often wondered if Clark and CEO Ed McCracken had managed to get along better, things might have turned out very differently for SGI.

Reader Comments

Joe

May 10, 2008 2:54 PM

Yes, it's too bad. SGI didn't read the market right. They thought that masses would have an endless appetite for high-end 3D graphics and that there would be an unlimited supply of business lining up to buy their workstations. But unfortunately for them, the market went in an entirely opposite direction. The masses wanted cheap, computers that would do the minimum for them like these cheezy 2D Flash graphics, not the high end of Hollywood 3D and movie compositing. Oh well, SGI's loss & our gain, because now you can buy a lovely O2 workstation fully loaded for far less than the components in it, certainly than the manufacturing quality control costs at that time. For $200 I recently bought one, to own a piece of of the SGI's past glory, which ironically works better than all that cheap stuff Microsoft and Intel sell us for 10 times as much today and doesn't work even half as well. It's amazing that people will spend so much on that Vista junk when they could own an SGI for much less now. But that's the way things go.

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Bloomberg Businessweek writers Peter Burrows, Cliff Edwards, Olga Kharif, Aaron Ricadela, and Douglas MacMillan, dig behind the headlines to analyze what’s really happening throughout the world of technology. Tech Beat covers everything from tech bellwethers like Apple, Google, and Intel and emerging new leaders such as Facebook to new technologies, trends, and controversies.

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