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Military drafts SGI for $26 million deal

The maker of high-end systems gets a shot in the arm by winning a multimillion-dollar contract to supply computing machines, software and services to the U.S. Defense Department.

SGI has won a $26 million contract to supply the U.S. Defense Department with high-end technical computing machines, software and services over the next 42 months, the company said Tuesday.

The Defense Department is purchasing the products and services through its High Performance Computing Modernization Program, which aims to give the United States technological supremacy in weapons design and on the battlefield.

The deal is a boost for SGI, a maker of high-end systems for technical tasks that has been struggling to recover after a failed expansion into the general-purpose server market. News of the sale helped lift the company's shares 14 percent at $1.28 on Tuesday.

Selling products to government customers, particularly to those in the military, has been a mainstay of SGI's business for years.

Part of the Mountain View, Calif.-based company's plan for the future hinges on new high-end Altix machines using Intel's Itanium processor and running the Linux operating system. Most SGI systems today use the company's own MIPS processor and Irix operating system.

The Defense Department is sticking with the MIPS-Irix models. The systems it's purchasing include the flagship Origin 3000 supercomputers, the Onyx 3000 variant for graphics-intensive applications, Origin 300 midrange machines, Total Performance 9500 high-end storage systems, and SGI's CXFS file system software.

Four defense sites will use the computers, SGI said. In particular, the Aeronautical Systems Center at Wright-Patterson Air Force Base in Ohio will benefit from the new purchases by installing four 512-processor Origin 3000 systems, two 64-processor Origin 3000s, a 12-processor Origin 3000, and two four-processor Origin 300 systems.

In addition, the Fleet Numerical Meteorology and Oceanography Center in Monterey, Calif., will work on improving its computer models of the ocean and atmosphere with a 256-processor Origin 3000. Also, the U.S. Army Engineer Research and Development Center in Vicksburg, Miss., will install two 512-processor Origin 3000 machines.