Troubled vendor targets SAP customers with Linux servers

Silicon Graphics is teaming up with a consulting firm to target SAP customers migrating off mainframe platforms.

Financially strapped Silicon Graphics Inc. (SGI), is targeting SAP customers planning to migrate off mainframe platforms with Linux-based servers.

The price would have to be pretty breathtaking before you would commit your business data to a company that is as deeply in trouble as SGI is right now.
Charles King,
principal analystPund-IT Research

The server maker is teaming up with Realtech AG, a German-based mainframe migration consultancy, to sell its servers to SAP customers considering alternative platforms.

"The customers we're talking to need to consolidate very massive data set clusters," said Scott Ellman, who serves as SGI's market segment manager for data management. "They're looking to scale to 64 processors and beyond."

While Mountain View, Calif-based SGI has its roots in developing what became an open source graphics platform, the company also began designing Linux servers used for supercomputing projects. It counts slot machine maker, Konami Gaming and NASA among its customers, according to Ellman. The vendor has struggled financially of late and is trying to extend its server line to some of SAP's largest customers who need high performance computing power for business applications.

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"Historically our customers tended to use the systems for more high performance computing applications than for enterprise," Ellman said. "Some customers need the processing power to have large amounts of data for doing data warehousing and business intelligence."

SGI is marketing its Altix 350, 330 and 4700 servers to SAP customers. The 350 starts at $16,000. It scales up to 32 processors and 384 GB of memory. The 330 costs about $7,000. It scales up to 16 processors and 128 GB of memory.

"SAP customers say they hate these forklift upgrades when two companies merge and then they have to throw out the old systems and bring in the new or when an upgrade requires more memory but not necessary more processors," Ellman said. "The Altix is uniquely scaleable in that you can pick the amount of processors, memory and [input/output] that you need and you can grow that over time simply by adding modules or bricks."

SGI may be trying to make a last ditch effort to gain a foothold in a niche area and stay afloat financially, said Charles King, principal analyst at Hayward, Calif.-based Pund-IT Research. SGI issued a public notice to investors in February, warning that it could be forced to file for bankruptcy or put the company up for sale due to poor earnings.

"The price would have to be pretty breathtaking before you would commit your business data to a company that is as deeply in trouble as SGI is right now," King said. "When you're desperate you look around and if you're trying to tread water, a Popsicle stick can look like a life raft."

In recent years, a number of vendors have been trying to cash in on mainframe migrations, according to King. Sun Microsystems Inc. sought its share of the migration business with its servers and Hewlett Packard Co. has also had a mainframe migration program. The latest to enter the fray is Oracle Corp., which is targeting mainframe users with its Oracle 10g database management system. Oracle believes its grid concept, in which computing power is organized via inexpensive Linux server clusters, is a cost-effective alternative to mainframes.

"Part of the difficulty that SGI has had for years is that they've been a company that has done very well in certain niche areas and have had less luck selling themselves as a platform for general purpose business computing," King said.

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