SGI ramping up for big Xeon E5 server push

Like everybody else in the server racket, Silicon Graphics is waiting somewhat patiently for Intel to get its "Sandy Bridge-EP" Xeon E5 processors out the door, so it can launch a whole new generation of machines. Or, in the case of SGI, several different generations.

Still, SGI has managed to sell existing Xeon and Opteron systems even as customers await the new iron, SGI president and CEO Mark Barrenechea confirmed in a conference call with Wall Street analysts on Tuesday, after the markets closed. He said SGI would be ready to ship the latest Xeon E5 systems for revenue in the first quarter of 2012, coinciding with Intel's expected debut of the chips.

"We are focused on the upcoming 'Romley' infrastructure," Barrenechea explained, referring to the code-name of the chipsets and motherboard features that make up the systems using the Xeon E5 chips. "The transition to Intel's Romley architecture has begun for our entire product line – including the next generations of UV, ICE and Rackable. This transition effectively extends our competitive advantage in shared memory and allows us to enter the highest end of the cluster market, to compete against HP, Cray, and IBM and deliver larger and more efficient clouds."

He added that SGI was prepping the widest lineup of dense-packed Rackable machinery in the company's history to coincide with the rollout of the Xeon E5 chips, and said test systems were already in the hands of customers.

SGI also announced that it is working with NASA's Ames Research Center to upgrade its current "Pleiades" Altix ICE cluster with the forthcoming Xeon E5 ICE machines, which are code-named "Carlsbad 3". NASA has committed to expanding the Pleiades cluster in the first quarter of 2012, and the system will also include 56Gb/sec Fourteen Data Rate (FDR) InfiniBand switching - the fastest available on the market today. NASA Ames is the poster customer for the old SGI (like Amazon was for the former Rackable Systems) and has been a big consumer of the shared memory and cluster systems created by the company over the years.

The plan NASA has put together calls for Pleiades to add another 1,700 compute nodes to the cluster, and boost its raw number-crunching performance by around 35 percent. The current Pleiades machine has 1.09 petaflops of aggregate performance. It consists of Altix ICE 8200EX systems using quad-core Xeon 5400 processors and Altix ICE 8400EX systems using quad-core Xeon 5500s and six-core Xeon 5600s, running at or around 3GHz.

The machine has a total of 111,104 cores. Assuming that SGI has sold NASA eight-core Xeon E5s and there are two sockets per node in the ICE "Carlsbad 3" systems, that's another 27,200 cores delivering around 460 teraflops of incremental peak performance. Over the next few years, NASA Ames plans to expand Pleiades to hit 10 petaflops.

Barrenechea was not in a position to spill more beans on the future SGI system designs, since Intel hasn't launched, and he said nothing about how SGI would employ the forthcoming "Interlagos" Opteron 6200 processor from Advanced Micro Devices in any of its future servers. He did point out that SGI was cooking up an in-memory system that would run standard Oracle or SQL Server databases, rather than specialized in-memory databases like Oracle's TimesTen and SAP's HANA.

In the quarter ended in September, SGI had sales of $178.9m, up 58.5 per cent. Product revenues came to $128.8m, with systems accounting for $110.8m and storage accounting for $18m. Services came to $50.1m. In the quarter, the public sector represented 44 per cent of total sales, and cloud service providers accounted for 25 per cent, with manufacturers accounting for 16 per cent. About 90 per cent of SGI's sales were done directly, and 59 per cent came down inside the United States.

In the quarter, Microsoft, eBay, Amazon, Northrup Grumman, Raytheon, and Lockheed Martin were big buyers of SGI wares, and online retailing giant Amazon was the biggie, accounting for 18 per cent of SGI's sales in the quarter all by its lonesome, or about $32.2m.

Even with all that, SGI still posted a $2.7m net loss, although it was a lot smaller than the $11.2m loss it had in the year-ago period. SGI is also burning some cash as it ramps up its Xeon E5 systems, but still has $112.5m in the bank.

To help drive towards its mid-term goal of hitting $1bn in annual revenues, Jim Wheat, SGI's CFO, said in the call that the company had filed a shelf registration with the Securities and Exchange Commission to allow it to raise as much as $100m through the sale of equities or debt securities, and added that it was looking for a big bank to give it a $50m credit line. The extra funds will give SGI leverage to chase new business opportunities and do acquisitions.

Looking ahead to fiscal 2012, Barrenechea reaffirmed SGI's guidance, saying it still expected for sales to fall between $740m and $780m and for earnings per share of between 15 and 30 cents. "Our business is showing resiliency in this period of volatility," he said. "While we are being a little more cautious on expenses, we are not changing our outlook for the fiscal year based on the macro environment."

As for the flooding in Thailand and the possibility of disk drive and other component shortages, Barrenechea said that SGI would "be just fine this quarter" and that it was working to build up supplies, and had certified alternative drives on its machinery. If there is a price rise for disks because of shortages, SGI will pass those costs straight through to customers and they have been warned of this. ®