Intergraph makes inroads

Electronic News, March 30, 1998 by Cynthia Bournellis

Computer division is quietly working to climb the steps of the success ladder

Huntsville, Ala.--While it may not buck heads with computer workstation giants Sun and Hewlett-Packard, Intergraph Corp., a provider of computer graphics hardware and software for Windows NT, is making headway into markets once dominated by companies whose names have been synonymous with publishing, digital media and broadcasting.

After a two-year period in which the company reorganized its business units into a series of wholly owned subsidiaries, sold off certain products and formed new channels of distribution, Intergraph Corp. is better positioned to ride the workstation market, a market undergoing a sea of change. "It's an El Nino year in the workstation market," said Peter ffoulkes, an industry analyst at Dataquest. New opportunities await Intergraph, and are being caused by the minimal market share held by Apple Computer, the lack of interest for Alpha-based workstations, and a pause in movement from Silicon Graphics while it works on new low- to-midrange Windows NT-based workstations.

According to figures from Dataquest, Intergraph Corp. last year, through its wholly owned subsidiary Intergraph Computer Systems, was the number eight supplier of workstations, with 26,000 shipments worldwide. Sun came in first, with shipments over 227,000. Hewlett-Packard was number two, and IBM was number three. "Sun won't be number one in 1998," said Mr. ffoulkes. He said HP is a more likely contender but not on the strength of its Unix offering, but rather with Windows NT machines.

Meanwhile, Intergraph Computer Systems is quietly working to climb the steps of the workstation ladder. "They are doing a good job of getting their technology to market," said Mr. ffoulkes. The newest products can be seen at next week's National Association of Broadcasters show in Las Vegas. Intergraph Computer will unveil a new product roadmap for its latest TDZ 2000 ViZual workstation line, which is aimed at digital content creation, animation, visual simulation, mechanical CAD, prepress and publishing markets. Priced at around $3,000, the new products include a new systems architecture that bumps up systems performance. Interest from customers in Intergraph Computer workstations began to peak last summer when Intergraph Computer showed its 3-D prowess at the Siggraph computer graphics show in Los Angeles. There, Intergraph announced a partnership with Sony to develop Windows NT 3-D workstations, which will utilize graphics chips, motherboards and graphics accelerator cards from Intergraph Corp. (EN, August 1997). Intergraph Computer turned heads again at the Macworld tradeshow in San Francisco in January, where it was the only Windows NT systems vendor on the floor.

Unlike many computer companies who rely on tactics such as grand-standing and verbal jousting with competitors to be seen and heard, Intergraph takes a more subtle, yet effective, approach. In terms of the Macintosh market, rather than expect Apple customers to throw out their Macs and start anew with Intergraph systems, Intergraph Computer plans to phase out Macs over time by integrating them with Intergraph computers.

Not Religious Toward Macs

"Not all people in publishing are that religious towards Macs...and NT does publishing pretty well," said Wade Patterson, CEO and president of Intergraph Computer Systems. "If you talk to an IT manager, they'll say their major concern is getting Macs out of the organization, because they want a more homogeneous environment." Intergraph Computer is accomplishing this through software.

Through a marketing program called MacFriendly, Intergraph Computer sells its ExtremeZ graphics workstations and InterServea Prepress servers as a solution that supports end-to-end workflow in a cross-platform environment. With this approach, Intergraph Computer hopes customers will eventually transition to its products. The Extreme Zs come bundled with connectivity software that allows Macintosh users to connect to Windows NT workstations to access and share files.

Intergraph transitioned to Windows NT in 1993, after years of being a supplier of Unix workstations, related software and proprietary RISC microprocessors and subsystems. At that time, Intergraph Computer was a business unit inside Intergraph Corp., focusing on servers, workstations and graphics cards. But the move to Windows NT came at a cost. While Intergraph Corp. did over $1 billion in revenue in fiscal year 1997, ended December 31, it hemorrhaged over $800 million in net income. Revenues have basically remained flat over the past five years. Of the $1 billion, about $70 million came from sales of servers, $525 million came from sales of workstations and $45 million came from sales of graphics cards. The balance of the revenue comes from a combination of software and value-added services. By the end of 1998, Intergraph Computer should account for 10-percent of total revenues, said Mr. Patterson. "We have a 50 percent growth plan this year."