Silicon Graphics International (SGI) handles computing on a large scale. The company provides high-performance computer servers that are based on the Linux operating system and designed for large-scale data center deployments. SGI also offers data storage servers, as well as modular data center systems sold under the ICE Cube brand. Its equipment is tailored to quickly access, analyze, process, manage, visualize, and store large amounts of data. SGI targets the IT, Internet, financial services, government, and electronics sectors, as well as scientific community. Clients have included Amazon.com (16% of sales in 2012), Microsoft, Yahoo!, and Deutsche Bank; the US federal government is also a top client.
The company took its current form when Rackable Systems bought the assets of high-performance computer pioneer Silicon Graphics, Inc. (SGI) for $42.5 million in cash in 2009. Rackable expanded its product line, customer base, and geographic reach with the acquisition, and the company adopted the better-known SGI brand in an effort to tap a larger global market. Uniquely for a computer maker, the company performs all of its manufacturing, assembly, and testing at a facility in the US.
While the bulk of SGI's sales come from of its core hardware business, the company's services unit, which accounted for 24% of sales in 2012, focuses on technical services such as hardware and software maintenance, system installation, configuration, spares management, site preparation, technical training, as well as software upgrades and updates. Additionally, the division offers such professional services as consulting, systems design, and support, as well as on-site staffing for customers in need of more hands-on technical assistance.
SGI reaches a global clientele through a direct sales force in nearly 20 countries and a network of resellers and distributors. Sales to customers in the Americas region make up more than 60% of its revenues, while the Asia Pacific region accounts for nearly one-quarter of sales, with much of that revenue coming from Japan. To cut costs in 2012, the company closed some offices and subsidiaries in Europe, resulting in a 25% reduction in staff in the region. The company's business in Europe, Middle East, and Africa shrunk for the year, while sales from the Americas and Asia Pacific regions experienced healthy growth.
SGI's sales rose for the third straight year to $753 million in 2012, representing a 20% increase over 2011. The company attributed the growth mainly to its scale out server and storage products, as well as customer support and professional services; it also cited a notable contribution from its Japanese business. SGI's operating costs also rose for the year, by 14%, mainly due to higher employee compensation and facilities costs associated with acquisitions. The sales boost wasn't enough to return the company (which has lost money each year since 2007) to profitability.
SGI uses periodic acquisitions to build out its product line and tap international markets in search of growth. In 2011 SGI paid $17.9 million to buy the 90% of SGI Japan that it did not already own from a group of investors that included NEC, Sony, and Canon. The deal gave the company an inroad to the technical computing market in Japan, adding clients in the government, manufacturing, telecommunications, media, and education sectors. Founded in 1987 as Nihon Silicon Graphics, SGI Japan is mainly a sales and service subsidiary.
SGI also gained a firmer foothold in the field of open source computational fluid dynamics (CFD) that year with the acquisition of OpenCFD, which developed OpenFOAM software, a platform featuring a wide variety of applications designed to aid engineers, scientists and product developers in the modeling and simulation of a wide variety of matter, from fluid flow to electromagnetics.
The company bought COPAN Systems in 2010 for about $2 million. The purchase expanded the company's data storage portfolio, adding an enterprise-level massive array of idle disks (MAID) platform and storage management software. COPAN specialized in what it called persistent data storage, allowing customers to decrease the cost and complexity of storing and managing extensive volumes of long-term information.