Silicon Graphics To Sell Cray Research To Tera Computer Co - Company Business and Marketing

EDP Weekly's IT Monitor, March 6, 2000

In a surprise to the computer industry, Silicon Graphics, Inc., (SGI) has agreed to sell super computing company Cray Research to the much smaller Tera Computer Co. in a deal valued at less than $100 million.

SGI had paid more than $700 million for the company only four years ago.

However, super computing has taken something of a competitive hit from the current process of combining multiple standard processors together to perform some of the functions previously performed by the super computers. However, there still remains substantial markets which can only performed by the super computers such as vector processing. Tera will change its name to Cray, Inc. upon completion of the transaction, and will acquire Cray's $200 million in revenue and increase its personnel from slightly more than 100, to slightly less than 1,000, and with the Cray name greatly expands its opportunities among companies which presently own Cray systems.

The ultimate demand for super computers is a question mark with estimates ranging from $1 billion to $10 billion for this market depending upon cost reductions in the super computers and performance enhancements that have been promised.