Posted by: Rob Hof on May 8, 2006
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.