The Rise and Fall of Silicon Graphics

Silicon Graphics was a pioneer in the computer industry, known for its high-performance graphics workstations. Its products were used in various fields, including animation, scientific visualization, and video game development.

Silicon Graphics' first product, the IRIS 1000, was released in 1984 and was a groundbreaking graphics workstation. It was the first to use a RISC (Reduced Instruction Set Computing) processor and a 24-bit graphics pipeline.

The company's innovative products quickly gained popularity, and Silicon Graphics became a leader in the industry. Its workstations were used by many top animation studios, including Disney and Pixar.

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Silicon Graphics was founded in 1982 by James Clark, an electrical engineering professor at Stanford University, who identified a need for desktop computers to display graphic images quickly and in three-dimensional detail.

James Clark left his position as an electrical engineering associate professor at Stanford University to found SGI with a group of seven graduate students and research staff, including Kurt Akeley, David J. Brown, Tom Davis, Rocky Rhodes, Marc Hannah, Herb Kuta, and Mark Grossman.

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The primary users of these computers were expected to be scientists and engineers developing elaborate 3D software for corporate and military research and development.

In 1992, SGI acquired MIPS Technologies Inc. for $333 million to secure the supply of future generations of MIPS microprocessors, including the 64-bit R4000.

The MIPS-based workstations and servers produced by SGI during the 1990s were capable of supporting up to 64 processors while managing up to three streams of high resolution, fully realized 3D graphics.

In 1993, SGI signed a deal with Nintendo to develop the Reality Coprocessor (RCP) GPU used in the Nintendo 64 (N64) video game console.

The RCP was developed by SGI's Nintendo Operations department, led by engineer Dr. Wei Yen, who later left SGI to found ArtX, which was acquired by ATI Technologies in 2000.

In 2006, SGI announced the end of production for MIPS/IRIX systems, and by the end of the year MIPS/IRIX products were no longer generally available from SGI.

In 2009, Rackable Systems, Inc. acquired Silicon Graphics, Inc. for $42.5 million and adopted the "SGI" name and brand.

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Ed McCracken's tenure as CEO from 1984 to 1997 was a period of significant growth for Silicon Graphics. The company's annual revenues skyrocketed from $5.4 million to $3.7 billion during those 13 years.

Silicon Graphics systems dominated the market for high-speed rendering of three-dimensional graphics, an area that even major players like IBM and Sun Microsystems avoided.

Under McCracken's leadership, Silicon Graphics became a major player in the industry, and its systems were in high demand.

Silicon Graphics faced significant challenges in the late 1990s and early 2000s that led to its decline. The company's market share began to erode due to the addition of 3D graphic capabilities to PCs and the ability of clusters of Linux- and BSD-based PCs to take on tasks previously handled by SGI servers.

In response to these challenges, SGI brought in new leadership, including Richard Belluzzo, who attempted to revamp the company's product line. This included introducing workstations running Windows NT, which ultimately failed and was abandoned a few years later.

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SGI's credibility in the market was further damaged by its premature announcement of a migration from MIPS to Itanium and its abortive ventures into IA-32 architecture systems. This led to a significant decline in the company's market capitalization, from over seven billion dollars in 1995 to just $120 million by the time it was delisted from the New York Stock Exchange in November 2005.

The decline of SGI was a gradual process that was accelerated by several factors. Ed McCracken was fired and replaced by Richard Belluzzo, who led the company into a number of initiatives that ultimately contributed to its decline.

One of these initiatives was the introduction of workstations running Windows NT, called Visual Workstations, which put the company in direct competition with Dell and made it difficult to justify a price premium.

This move was unsuccessful and was eventually abandoned a few years later, further eroding SGI's market share. SGI's premature announcement of its migration from MIPS to Itanium also damaged its credibility in the market.

The company's attempts to venture into IA-32 architecture systems, such as the Visual Workstation line and the SGI 1000-series Linux servers, further exacerbated its decline. SGI's market capitalization dwindled from a peak of over seven billion dollars in 1995 to just $120 million by the time of delisting.

In November 2005, SGI announced that it had been delisted from the New York Stock Exchange due to its low share price, a stark contrast to its peak in the mid-90s.

In December 2008, SGI received a delisting notification from NASDAQ due to its low market value.

SGI's market value had been below the minimum $35 million requirement for 10 consecutive trading days.

This was also a concern because SGI didn't meet NASDAQ's alternative requirements of a minimum stockholders' equity of $2.5 million or annual net income from continuing operations of $500,000 or more.

On April 1, 2009, SGI filed for Chapter 11 again.

The company announced that it would sell substantially all of its assets to Rackable Systems for $25 million.

The sale was ultimately finalized on May 11, 2009, for $42.5 million.

Rackable Systems adopted "Silicon Graphics International" as their global name and brand at the same time.

The Bankruptcy Court scheduled continuing proceedings and hearings for June 3 and 24, 2009, and July 22, 2009.

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In mid-2005, SGI hired Alix Partners to advise it on returning to profitability and received a new line of credit.

SGI announced it was postponing its scheduled annual December stockholders meeting until March 2006, proposing a reverse stock split to deal with the de-listing from the New York Stock Exchange.

A new chapter began in January 2006 with the hiring of Dennis McKenna as SGI's new CEO and chairman of the board of directors, succeeding Robert Bishop.

On May 8, 2006, SGI filed for Chapter 11 bankruptcy protection for itself and U.S. subsidiaries as part of a plan to reduce debt by $250 million.

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The U.S. Bankruptcy Court approved SGI's first day motions and its use of a $70 million financing facility provided by a group of its bondholders just two days later.

In September 2006, SGI announced the end of development for the MIPS/IRIX line and the IRIX operating system, with production ending on December 29 and support ending after December 2013.

SGI emerged from bankruptcy protection on October 17, 2006, with its stock symbol on Pink Sheets, SGID, being canceled and new stock issued on the NASDAQ exchange under the symbol SGIC.

The company's earlier North Shoreline headquarters is now occupied by the Computer History Museum, while the newer Amphitheatre Parkway headquarters was sold to Google in 2008.

SGI re-entered the visualization market in April 2008 with the SGI Virtu range of visualization servers and workstations, which were re-badged systems from BOXX Technologies.

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Silicon Graphics' core market has traditionally been misunderstood, with many thinking it's Hollywood visual effects studios. In reality, the company's largest revenue has come from government and defense applications, energy, and scientific and technical computing.

One notable example of SGI's largest single sale was to the United States Postal Service, which used SGI servers to power an artificial intelligence program that mechanically read, tagged, and sorted mail.

SGI's product line has shifted over the years, with the company once dominating the visual effects industry but now focusing on more niche markets. The rise of commodity workstations running Linux, Windows, and Mac OS X has made it harder for SGI to compete in this space.

Here are some of SGI's notable products:

Silicon Graphics, Inc. (SGI) offered a wide range of hardware products, including workstations and servers, that catered to various markets and industries.

The company's early products, such as the IRIS 1000 series graphics terminals and the IRIS 2000 series workstations, were first released in the mid-1980s and used Motorola 68010 CPUs. The IRIS 2000 series was a significant product line, with five models available, including the 2300T, 2400T, and 2500T, which had 68020 CPUs.

SGI's IRIS 3000 series workstations, released in the late 1980s, were notable for their use of hardware graphics accelerators and their ability to support complete UNIX workstations.

Here are some key models from SGI's product lines:

The IRIS 3000 series was a significant product line, with the 3130 model being a powerful workstation that could support a complete 3D animation and rendering package without mainframe support.

SGI's product lines continued to evolve over the years, with the introduction of new models such as the IRIS 4D/50/60/70/80/85, IRIS 4D/20/25/30/35, and the Onyx and Power Onyx series, which were designed for visualization and high-performance computing.

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IRIS GL and OpenGL were a game-changer for the industry, allowing fast and efficient cross-platform graphics programs to be written.

IRIS GL, SGI's proprietary API, was initially used to access its high-performance 3D graphics subsystems, but it became cumbersome to use over time.

In 1992, SGI decided to reform IRIS GL and create a new API, which would eventually become OpenGL.

This bold move allowed SGI's competitors to license OpenGL cheaply and set up an industry-wide consortium to maintain the standard.

For over 20 years, OpenGL remained the only real-time 3D graphics standard to be portable across various operating systems.

SGI's decision to reform IRIS GL and create OpenGL had a lasting impact on the industry and paved the way for more efficient and cross-platform graphics development.

Silicon Graphics made significant acquisitions and partnerships throughout its history. In 1995, SGI purchased Alias Research, Wavefront Technologies, and Kroyer Films for approximately $500 million, merging them into Alias|Wavefront.

SGI sold the business to Accel-KKR for $57.5 million in June 2004, and later that year, Autodesk acquired Alias for $182 million in cash. In February 1996, SGI purchased Cray Research for $740 million, but sold the Cray Business Systems Division to Sun Microsystems for an undisclosed amount.

SGI also sold the Cray brand and product lines to Tera Computer Company for $35 million plus one million shares in 2000.

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In 1998, SGI announced that future generations of its machines would be based on Intel's Itanium processor, code-named "Merced".

This marked a significant shift from their own MIPS processors, which had been used in their machines up until then. SGI planned to focus on the embedded market, where MIPS was having some success.

SGI's first Itanium-based system was the SGI 750 workstation, launched in 2001, but it was short-lived. The Itanium systems used SuSE Linux Enterprise Server with SGI enhancements as their operating system.

Unlike the MIPS systems, which ran IRIX, the Itanium systems required Transitive Corporation's QuickTransit software to allow old MIPS/IRIX applications to run on the new Itanium/Linux platform. This was a significant change for SGI users.

The Itanium 2-based Altix eventually replaced the MIPS-based Origin product line in the server market.

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SGI made a significant acquisition in 1995, purchasing Alias Research, Kroyer Films, and Wavefront Technologies for approximately $500 million.

This deal led to the creation of Alias|Wavefront, a company that would later be sold to Accel-KKR in 2004 for $57.5 million.

In June 2004, SGI sold the business, later renamed to Alias/Wavefront, to the private equity investment firm Accel-KKR for $57.5 million.

Autodesk acquired Alias in 2005 for $182 million in cash.

SGI purchased Cray Research in February 1996 for $740 million, expanding its presence in the supercomputer market.

The Cray brand and product lines were later sold to Tera Computer Company on March 31, 2000, for $35 million plus one million shares.

SGI also distributed its remaining interest in MIPS Technologies through a spin-off effective June 20, 2000.

The sale of the Cray Business Systems Division to Sun Microsystems in 1996 was for an undisclosed amount, later acknowledged to be "significantly less than $100 million".

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Silicon Graphics' core market has traditionally been a misconception, as its largest revenue has actually come from government and defense applications, energy, and scientific and technical computing.

SGI's largest single sale was to the United States Postal Service, where its servers powered an artificial intelligence program to read, tag, and sort mail at key mail centers.

The company's servers were used for a unique application that showcased their capabilities in a non-traditional market.

Hollywood Animation was a major focus for SGI, and it's easy to see why. SGI's computers were instrumental in creating special effects for some of Hollywood's biggest blockbusters.

In traditional animation, realistic effects were achieved by painstakingly altering drawings or models for each frame of film. This labor-intensive process was a thing of the past with the rise of computer-generated animation.

SGI's computers played a key role in this transition, allowing for the creation of virtual worlds where computers could automate much of the work. This marked a significant shift in the animation industry.

The first feature-length animated movie to be entirely computer-generated, Toy Story, was created with SGI's computers in 1995. This was a major milestone in the history of animation.

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Silicon Graphics' core market has traditionally been misunderstood as being solely focused on Hollywood visual effects studios. However, the company's largest revenue has actually been generated by government and defense applications, energy, and scientific and technical computing.

SGI's largest single sale was to the United States Postal Service, where their servers powered an artificial intelligence program to read, tag, and sort mail at key mail centers.

The rise of affordable workstations running Linux, Windows, and Mac OS X effectively pushed SGI out of the visual effects industry in all but the most niche markets.

Here's a breakdown of SGI's core market: