SGI plans to transfer Cosmo's 100 employees to other parts of the company and is evaluating future uses for the firm's technology, said SGI spokesman John Thompson, who noted that the unit should be closed within the coming weeks.
The workstation maker had been looking to sell Cosmo as part of its restructuring plans to divest itself of noncore businesses.
Two weeks ago, an SGI spokeswoman said that the companies had signed a letter of intent to sell Cosmo to Sony, and that SGI executives had hoped to sign a definitive agreement within the coming weeks. But the talks broke off.
"After a lengthy discussion with Sony, SGI, and Cosmo management, the companies jointly decided that the planned purchase of Cosmo Software will not go forward," said Sony spokeswoman Joanne Hvala.
Hvala declined to elaborate on the reasons why the parties were not able to reach an agreement.
The main point of contention apparently was not the sales price, said one source familiar with the deal.
Cosmo is a developer of VRML (Virtual Reality Modeling Language) for the Web. Sony uses Cosmo software for products such as its Mask of Zorro game. Cosmo's tools for Web animation and interactivity also are used in Netscape's Communicator suite 4.05.