SGI Versus Dell Case Analysis
Anthony Moore
SGI versus Dell: Competition
In Server and Cloud Computing
I. The History, Development, and Growth
Rackable Systems was founded in 1999 by Mark Barrenechea in Milpitas Silicon Valley, California, as a specialist server company. Rackable had achieved much success until late 2006 when much larger companies, such as IBM, HP and Dell, began a price competition, driving down cost and Rackable Systems profit margins as well. During the 2000’s Rackable changed business strategies several times and acquired acquisitions in an attempt to gain a competitive advantage and compete in the server market. However, during this turbulent time Rackable Systems managed to stay profitable. In 2009, Mark Barrenechea sought fit to purchase Silicon Graphics, Inc., which was in bankruptcy, for a total of $45 million (Hill, C., & Jones, G.).
Silicon Graphics, Inc. was formed in 1982 by Jim Clark. Within the first two years of forming SGI, Clark’s team developed a powerful semiconductor chip that would allow small computers to produce sophisticated three-dimensional graphics simulations, which at the time required large mainframes. Silicon Graphics gained their competitive advantage through pioneering technology in 3-D computer graphics to create products used in film production, engineering, and chemistry. Within the first decade of creating SGI they experienced explosive growth and was deemed a Fortune 500 company (SGI History).
Although SGI was known as an early graphics innovator, SGI began to lose their competitive edge and profits suffered. SGI’s major competitors at the time were ATI and NVidia. These companies were able to put capabilities on chips at much lower cost than SGI and offered a far more superior product. As a result, in 2009 the company was forced to file chapter 11 bankruptcy (SGI Company Overview).
In 2009 Rackable purchased Silicon Graphics, Inc., by then a maker of supercomputers, out of bankruptcy and adopted Silicon Graphics International
SGI versus Dell: Competition
In Server and Cloud Computing
I. The History, Development, and Growth
Rackable Systems was founded in 1999 by Mark Barrenechea in Milpitas Silicon Valley, California, as a specialist server company. Rackable had achieved much success until late 2006 when much larger companies, such as IBM, HP and Dell, began a price competition, driving down cost and Rackable Systems profit margins as well. During the 2000’s Rackable changed business strategies several times and acquired acquisitions in an attempt to gain a competitive advantage and compete in the server market. However, during this turbulent time Rackable Systems managed to stay profitable. In 2009, Mark Barrenechea sought fit to purchase Silicon Graphics, Inc., which was in bankruptcy, for a total of $45 million (Hill, C., & Jones, G.).
Silicon Graphics, Inc. was formed in 1982 by Jim Clark. Within the first two years of forming SGI, Clark’s team developed a powerful semiconductor chip that would allow small computers to produce sophisticated three-dimensional graphics simulations, which at the time required large mainframes. Silicon Graphics gained their competitive advantage through pioneering technology in 3-D computer graphics to create products used in film production, engineering, and chemistry. Within the first decade of creating SGI they experienced explosive growth and was deemed a Fortune 500 company (SGI History).
Although SGI was known as an early graphics innovator, SGI began to lose their competitive edge and profits suffered. SGI’s major competitors at the time were ATI and NVidia. These companies were able to put capabilities on chips at much lower cost than SGI and offered a far more superior product. As a result, in 2009 the company was forced to file chapter 11 bankruptcy (SGI Company Overview).
In 2009 Rackable purchased Silicon Graphics, Inc., by then a maker of supercomputers, out of bankruptcy and adopted Silicon Graphics International
References: Dell Inc. (2014, January 1). Retrieved November 10, 2014, from http://www.google.com/finance?fstype=ii&q=NASDAQ:DELL Hill, C., & Jones, G. (2012). SGI versus Dell. In Essentials of Strategic Management (3rd ed., p. C34). Mason: South-Western. SGI Company Overview. (2014, January 1). Retrieved November 10, 2014, from https://www.sgi.com/company_info/overview.html SGI History. (1999, January 1). Retrieved November 7, 2014, from http://www.fundinguniverse.com/company-histories/sgi-history/ SGI Income Statement. (2014, January 1). Retrieved November 7, 2014, from http://finance.yahoo.com/q/is?s=SGI&annual SGI Investor Relations. (2014, January 1). Retrieved November 10, 2014, from http://investors.sgi.com/annuals.cfm 2014 Annual Report SGI Products. (2014, January 1). Retrieved November 7, 2014, from http://www.sgi.com/products/