On the heels of higher-than-expected profits, Silicon Graphics (SGI) today slashed prices on its midrange workstations by up to 20 percent and beefed up capabilities in its low-end models to make its mark at the Siggraph 97 computer graphics technology show in Los Angeles.
SGI cut the prices of its mid-range Octane workstations by approximately $5,000 across the product line, the company said. The cuts mean systems in the line now cost between $19,995 and $55,545.
Dual-processor systems now start at about $28,000. The Octane line debuted in January 1997.
In addition, the company announced an increase in processor speeds on several models in the entry-level O2 workstations. A new O2 workstation with a R5000 MIPS 200-MHz microprocessor, a 2GB hard drive, and 1MB of level 2 cache now lists for $8,495. There are nine models in the O2 line.
The price cuts and performance enhancements come as Windows NT workstations from Intel-based manufacturers such as Compaq Computer and Hewlett-Packard make incursions into the Unix workstation arena. HP today announced powerful Intel-based NT workstations priced between $10,000 and $20,000.
Since NT workstations debuted last year, sales of Unix systems have remained relatively flat, say analysts. And within the Unix world, Sun Microsystems (SUNW) has grown at the expense of competitors like SGI.
Edward McCracken, chief executive officer at SGI, has in fact acknowledged that the company's 3D graphics business was down close to 10 percent this past quarter due to, among other factors, NT.
NT hasn't been the company's only problem. A darling of the high-tech industry three years ago, SGI has had to endure organizational restructuring, shareholder lawsuits, and occasionally quarters of unexpectedly large losses. More recently, computing gargantuan HP announced that it would roll out $100,000-plus Unix workstations and systems in 1998, a rarefied market that has been until now dominated by SGI.
Initial signs of a recovery emerged on July 25 when SGI posted net profits for its fourth fiscal quarter of $102.4 million, or 56 cents a share, compared with a loss of $48.7 million, or 30 cents a share, for the same quarter the year before.
Wall street expected the company to post earnings of only 34 cents a share.
"It looks like they are on track, and, if their order growth continues at its current level, it could be the start of a turnaround," said Brian Eisenbarth, an analyst with Cowen & Company, of the earnings report.
Better graphics for NT is the dominant theme of this year's Siggraph: