Deja Vu at SGI

In a bid to rise from the ashes of bankruptcy, SGI today announced that it would broaden its product line to provide lower-cost options, including the introduction of an x86-based server.

Said an SGI marketing manager: "Obviously, one of the things we need to [do] is expand our market reach." She added that the new products "are very much part of our path back to profitability."

But haven’t we seen this show before from SGI? If I remember correctly — and, surprisingly, in this particular instance, I do — SGI originally attempted to repel commoditization in the visual-computing marketplace back in the bad-old 90s by joining the league of hardware vendors designing and selling industry-standard workstations and servers based on Intel microprocessors and Microsoft’s Windows operating system.

It didn’t turn out all that well for SGI the first time, and there’s no reason to believe it will resolve itself any differently today, even though they’re using Linux instead of Windows this time around. Some companies, such as Dell, are built to make thin margins on huge volumes of box shipments. Others, such as SGI, were build to charge a premium and reap higher margins for exclusive, research-intensive features and functionality that cannot be obtained from run-of-the-mill workstations and servers.

However, as the industry-standard boxes got faster, better, and "good enough" for a wide range of applications in visual computing, SGI found that its value proposition, and its higher prices, retained appeal for a rapidly diminishing audience involved with increasingly esoteric applications. 

It tried, back in the 90s, to remake itself as a lean, mean operational machine, selling industry-standard machines with a subset of its previous functionality, but SGI wasn’t built to play that game. The result was the perception of competitive capitulation, a damaged brand, and increasing irrelevance. It’s difficult to envisage how it will turn out any differently this time.

If the definition of insanity, according to Ben Franklin, "is doing the same thing over and over and expecting different results," then it’s time to summon the doctors in the lab coats to a former star of the technology firmament based in Mountain View.

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