Silicon Graphics (SGI) will reduce its organisation by more than half in its latest attempt to remain competitive within the market.
The measures will result in up to 1500 employees being axed and some staff being transferred to its partners. SGI has formed a separate business unit for its Windows NT workstations business in a joint venture with an unnamed partner to take over distribution and development of the product line.
It will spin off the Cray branded systems business, with the aim of passing control or selling it to another company. SGI admitted it was in discussions with potential partners to assume the operation of this business.
The manufacturer said it will continue to develop these systems in conjunction with its ccNuma servers. The Cray business represented less than 10 per cent of SGI's revenue in the latest quarter.
SGI's graphics engineering team will transfer to graphics processor specialist Nvidia as part of the two companies' relationship to develop and sell high-performance graphics systems, and also the volume embedded graphics chip market.
Rick Belluzzo, chairman and chief executive of SGI, said: "The growth and profitability shown in our most recent quarterly results indicate we're headed in the right direction. Our next step is to unlock some of our great proprietary technologies and allow them to flourish in mainstream markets."
The company also plans to spin off its Mediabase internet streaming development team and technology into a recently formed company, with SGI retaining a minority stake. Next week, it plans to give details on an alliance with NEC aimed at marketing SGI's high-performance systems to the Japanese market.
Belluzo admitted SGI would be a smaller business after these measures were carried out, but claimed it would allow the company to take advantage of sectors where the company could devote resources.
"This strategy enables us to place a priority on internet opportunities.
The emergence of the broadband internet over the next several years, together with the growth of Linux and other open source technologies, will create huge opportunities for SGI. We will put significant resources into the pursuit of these opportunities," he said.
Andy Butler, analyst at the Gartner Group, said the recent acquisitions of Sequent by IBM and Data General by EMC last week has left SGI as the only small player selling non-uniform memory architecture (Numa), a technology for linking numerous processors within high-end servers.
"SGI's Numa has been marooned in the server market. We believe most server vendors will bring out ccNuma servers in the near future. SGI lacks the critical mass to take advantage. This increases the chances of someone buying SGI," noted Butler.
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