See Si Graphics bid for MIPS defensive

Electronic News, March 16, 1992 by Craig Stedman, Jonathan Cassell

MOUNTAIN VIEW, Calif. -- Silicon Graphics' move last week to acquire MIPS Computer Systems was seen as driven in part by concerns that MIPS' recent shift toward a PC-oriented R&D strategy was leaving its R4000 microprocessor behind competing RISC devices in the performance categories at the heart of SGI's current business.

SGI has been developing its own R4000 implementations to buttress the floating-point throughput and other features of the original MIPS design, and sources within the ACE group said the two companies apparently had differed over some aspects of the architecture's direction.

As part of its work, the sources said, SGI appears to be interested in possibly changing the MIPS instruction set to add more advanced floating-point and graphics functionality at the chip level while still maintaining full compatibility with the existing architecture. MIPS executives reportedly were resisting that idea.

SGI president and chief executive Ed McCracken said repeatedly during a press conference last week that the company plans to continue MIPS' focus on the PC level in hopes of driving high volumes for the R4000. He tried to position the MIPS device as "the alternative to Intel" in that part of the market.

However, he and MIPS' chairman, president and chief executive Robert Miller acknowledged that widespread questions in the industry about the relative performance capabilities of the R4000 were among the factors that led to the planned acquisition by SGI.

Mr. Miller noted that the recent introduction by MIPS investor Digital Equipment Corp. of its own Alpha RISC architecture, plus recent advances by Hewlett-Packard and IBM, played a role in "stimulating" the two companies to start discussing a possible deal about three months ago.

"We decided we wouldn't just be satisfied in saying we're the price/performance leader or the lower-cost RISC microprocessor," he said. "We wanted to maintain performance leadership, and from our conversations it became clear that the one way to guarantee that is to put our companies together."

The acquisition was proposed by SGI, Mr. Miller added, and he denied reports that MIPS had talked with NEC or other potential suitors. "Ed proposed the arrangement to me. We were never looking for it," he asserted. "Until we received the proposal, we never thought about it."

Mr. McCracken, meanwhile, said SGI has not decided whether R&D responsibility for the R4000 and follow-ons would remain within the MIPS organization or be handled directly by SGI, which reportedly has hired a number of former MIPS designers in recent months.

"We're continuing to look at those sorts of things," he said, although he added that the MIPS Technologies Inc. subsidiary that SGI plans to set up would be in charge of such functions as licensing and marketing the chips and handling relations with semiconductor vendors.

Mike Ramsay, senior vice president and general manager of SGI's entry systems division, confirmed that the company is working on its own R4000 design with "very high" floating-point speeds and said MIPS' shift toward the PC level "was a little bit of a concern" to SGI.

"MIPS' focus on the lower end we think is good, but it's probably also reasonable to speculate that we would focus on ensuring that the R4000 is competitive at the performance end of the spectrum," Mr. Ramsay said. The ability "to have a large influence over the design and evolution" of the architecture was one of SGI's motives, he added.

Mr. Ramsay also acknowledged that SGI expects the MIPS instruction set to change "over time, but in a very open way," that would not break compatibility with existing implementations. He would not comment directly on whether MIPS was opposed to such changes.

The performance issues surrounding the R4000, exacerbated by a year-long R&D delay on the chip, had already driven companies like Convex Computer and Kubota Pacific Computer to turn away from the MIPS camp and were vexing some remaining vendors besides SGI.

"Now that it's in the past, I've always been concerned about the fact that there was too much emphasis (by MIPS) on the desktop part," said John Chen, executive vice president at Pyramid Technology, which employs MIPS chips in its multiprocessing machines. "Having volume is interesting and I think it's needed, but the low end doesn't have the margins. But now I think that's all over, because SGI is also pushing the high end and multiprocessing."

"The MIPS chip is better in terms of price/performance than pure performance, where it's clearly being outclassed by the others," added Jim Mannos, president of Sony Microsystems. DEC also was concerned about "some aspects that we would have liked to have seen on a more aggressive schedule," a spokesman there said.

The proposed stock-swap acquisition, valued at $334 million under SGI's closing stock price last Thursday and scheduled to be completed by the end of June, was also driven by worries about MIPS' shaky financial condition was jeopardizing its ability to develop the R4000.