HPE completes acquisition of SGI

Hewlett Packard Enterprise has completed its acquisition of the HPC veteran, SGI, formerly Silicon Graphics, for $275 million.

HPE hopes to use SGI’s server business, which is aimed at the high-performance computing (HPC) market, to bolster its own its HPC hardware portfolio. ‘This deal combines SGI's computing strengths with HPE's global reach,’ said Antonio Neri, executive vice president and general manager, Enterprise Group, Hewlett-Packard Enterprise. ‘SGI's technologies and services will further our position in high-performance computing and give our customers the best of data management capabilities for real-time analytics.’

SGI has seen some trouble in recent years, in 2016 the company reported $533 million in revenue, with a net loss of $11.1 million. This was slightly better than the previous year which generated $521 million and a $39 million net loss.

With flagging profits and rising overheads at SGI, HPE sees an opportunity to acquire SGI’s technology portfolio to establish itself firmly in the HPC market. In June 2016 the IDC reported that that the HPC industry is already an $11 billion segment, and it is expected to grow at an estimated 6-8% CAGR over the next five years. HPE hopes to secure a foothold in this market with the acquisition as this will accelerate the development of new solutions in areas such as weather mapping, genomics research, life sciences, and cybersecurity.

SGI is one of the pioneers of the HPC industry, as the company made millions in the 90’s building high-performance MIPS-based workstations to users in the entertainment industry. The company also saw success selling to military users, in 1997 SGI reported its first billion-dollar quarter, Q4 in 1997.

SGI was also responsible for the creation of OpenGL, which is still used as real-time 3D graphics standard which can be ported across a variety of operating systems. In 1992 SGI decided to remove its proprietary IRIS GL and made a move to allow the resulting OpenGL API to be licensed by SGI's competitors. Open GL was transferred to the  Khronos Group in 2006.

SGI’s graphics workstations were eventually surpassed by the rise of low-cost x86 clusters, and the company began to decline. On April 1, 2009, SGI filed for Chapter 11 bankruptcy protection and announced that it would sell its assets to Rackable Systems. The deal was finalised on May 11, 2009, with Rackable assuming the name ‘Silicon Graphics International.'

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