Tera to acquire Cray vector business from SGI

By acquiring Cray, Tera expects to accelerate its ability to commercialize the MTA technology. Tera obtains Cray's operating system and user environment software and expertise, which is highly valued in production computing environments that often require DOD-certified security features and strong support for data management.

Based on the agreement, SGI will retain exclusive rights to its modular, scalable NUMA technology, including current and future products, and supporting software, system and service engineers, as well as operations in Chippewa Falls and Eagan, Minn. Also unaffected by the sale are SGI's current NUMA products, the SGI Origin server and Silicon Graphics Onyx2 visual workstation lines.

The agreement follows SGI's previously announced decision to seek a buyer for the vector business as part of a plan to further position the company for sustainable profitability and growth.

"Cray, Inc. will reinvigorate the global high-performance sector by focusing on serving the needs of customers who want to solve the most demanding problems," said Debra Goldfarb, IDC's Group Vice President-Worldwide Systems & Servers. "IDC has extensively researched the requirements of these high-end customers and found that their application demands far exceed currently available technology. Cray, Inc. has the potential to expand the market beyond current projections by delivering customized high-end HPC products."

IDC forecasts the total high-performance computing market as growing steadily from $5 billion this year to about $7.5 billion in 2003. The advent of Tera MTA supercomputers and the forthcoming Cray SV2 are expected to accelerate growth in the high-end capability market sector. Cray, Inc. systems can compete for much of the $2.5 billion growth in the HPC market and expand high-end market share by reclaiming applications for supercomputing that are now served by mid-range systems. Also, the Cray SV2 is expected to restore U.S. leadership in the field of weather and climate prediction, and reclaim market share from Japanese competition.

Cray's current customers include the world's leading automotive and aerospace companies, weather forecasting centers, major academic research centers, and a host of government agencies in the U.S. and abroad serving space, defense and intelligence needs. Cray, Inc.'s product offerings, technology, R&D, service and manufacturing resources will address the advanced high-performance and supercomputing demands of industrial, commercial, and national security applications.

Cray, Inc. will continue to invest in the completion of Cray's existing development projects, particularly the Cray SV2, which will offer next-generation vector processing technology and is targeted for first delivery in 2002. When the SV2 contract was announced by SGI in September 1999, a Department of Defense spokesperson noted that supercomputers "are absolutely essential to U.S. national security interests." The U.S. government has committed significant support to the Cray SV2 program.

Assets that provide strategic benefits include:

• Product lines and related services with annual revenues of over $200 million.
• A service organization supporting over 600 Cray supercomputers installed at about 200 customer sites in approximately 30 countries. The installed base includes about 200 large-scale supercomputers, like the Cray YMP, C90, T90, as well as more than 50 Cray T3E massively parallel processing systems.
• Integrated design and manufacturing capabilities, including the ability to integrate CMOS in a variety of computing architectures, which should provide additional synergies over time.
• Significant software products and related experience and expertise. Cray's system software, operating systems, compilers, libraries and tools are robust, secure support for production computing. Cray brings a sizable base of third-party applications software as a result of its long history of fostering relationships with key suppliers of strategically important design, analysis and simulation codes.
• The combined companies will comprise about 900 employees. Of these 900 employees, roughly 400 are highly skilled engineers in supercomputer hardware and software design and development, as well as manufacturing.
• A strong R&D program totaling approximately $50 million annually.
• Worldwide sales coverage with highly experienced sales professionals, existing sales relationships and channels of distribution in about 30 countries.
• The Cray brand name, which is synonymous with supercomputing worldwide.

Cray, Inc. will offer an impressive array of complementary supercomputing products and technology, becoming the leading provider of a full spectrum of high-performance and supercomputer applications.

A summary of the product line and target markets includes:

• Tera MTA - designed with a revolutionary supercomputer architecture targeted to customers who have computational problems that have proved difficult to run in parallel. The MTA is also substantially easier to program than other types of parallel computers, which should facilitate its broader use in general purpose computing. In historic supercomputer markets such as the automotive, aerospace and pharmaceutical industries, the Tera MTA has the potential to offer the 10:1 performance differential that once distinguished Cray from its competitors. Other application examples suitable for the MTA include computer-aided design, data base mining, communication switching, realtime e-commerce and animation.
• Cray T3E - targeted at the environmental science, academic research, and national research laboratory markets. In the "Top 500" supercomputing site rankings, Cray T3E systems accounted for 24 of the world's top 50 supercomputers on the November 1999 list. Customers for the T3E include the DOD Naval Oceanographic Office, Electronic Data Systems (EDS), NASA's Goddard Space Flight Center, Phillips Petroleum Company, National Energy Research Scientific Computing Center, System Engineering Research Institute in Korea, UK Meteorological Office, and the US Army High-Performance Computing Center.
• Cray SV1 - targeted at Cray's installed base of vector supercomputing customers. With its competitive price/performance, large base of applications software, and high reliability the SV1 was named "Supercomputer Product of the Year" by Scientific Computing and Automation magazine in 1999. The SV1 is a vector supercomputer that is compatible with Cray's earlier Cray J90, YMP, C90 and T90 product lines.
• Cray SV2 - targeted for release in late 2002, Cray SV2 development is considered essential to U.S. national security interests and is partially funded by the Department of Defense. The Cray SV2 product is intended to leapfrog Japanese vector supercomputer competition from Hitachi, Fujitsu and NEC. Its design considerably extends the combination of custom-designed high-end vector processors with the high-speed memory access typical of Cray vector supercomputers. Plans call for the system to scale to peak performances of multiple tens of teraflops. One teraflop is equivalent to a trillion calculations per second.

The combination of Cray, Inc. product offerings will be designed to enable market growth by providing performance on software programs that today are often limited by existing computing hardware capacity, and by offering customers product solutions tailored to address customer problems. Applications software is crucial to commercial sales. The architectural breakthrough of the Tera MTA system simplifies the problems of parallel programming, making it possible to host applications of critical importance to industry that, until now, have resisted effective parallelization.