SGI, Real 3D in graphics tie-up

Silicon Graphics took a ten percent stake in graphics chip maker Real 3D and said the two companies would undertake cooperative marketing and technology and business development.

Under the terms of the agreement, Real 3D will be a preferred provider for future SGI workstation products. SGI will assist in the marketing of Real 3D products such as RealScan 3D, and the two companies will collaborate on future software technologies and initiatives.

SGI's investment is worth between $20 million to $25 million to the Orlando, Florida, company, according to industry sources. Intel owns 20 percent of Real 3D, while Lockheed Martin, which founded Real 3D in 1996, owns the remainder.

Separately, SGI and Real 3D agreed to end litigation and entered into a royalty-free graphics patent cross-license. The agreement adds to licensing deals Real 3D already has with Lockheed Martin, Intel, and Sega.

"Our strategic relationship with Silicon Graphics continues Real 3D's strong tradition of establishing key relationships with industry leaders," said Gerry Stanley, Real 3D's president, in a prepared statement.

Separately, Standard & Poor's today lowered its ratings of SGI and its wholly owned subsidiary Cray Research.

The downgrade reflects SGI's lack of profitability and weakened market position in the highly competitive workstation and high-end server markets. The Mountain View, California, company has been struggling with losses in the low-end workstation market to low-priced Intel-based PCs, and with inability to expand penetration in the more profitable server market.

News.com's Jeff Pelline and Reuters contributed to this report.