HP Enterprise Buying SGI for $275M, Gains Analytics and Supercomputers
Eyeing the growing demand for ever-faster and more complex data handling and analytics, Hewlett Packard Enterprise (HPE) yesterday announced plans to acquire the high-performance computing company SGI for an estimated $275 million in cash and debt.
Founded as Silicon Graphics Inc. in 1981, SGI has more than 6,500 customers, 1,000 employees and over 600 granted and pending patents. James Mashey, the company's chief scientist until 2000, is credited with first coming up with the term, "big data."
HPE said the SGI acquisition, expected to close in the first quarter of its 2017 fiscal year, will complement its existing portfolio of computing and analytics technologies for the enterprise market. Citing data from the analyst firm IDC, HPE predicted the addition of SGI will help its high-performance computing segment grow significantly over the next three years, with even faster growth expected in its data analytics business.
Growing Use of Supercomputers
"Once the domain of elite academic institutions and government research facilities, high-performance computing (HPC) -- the use of 'super' computers and parallel processing techniques for solving complex computational problems -- is rapidly making its way into the enterprise, disrupting industries and accelerating innovation everywhere," Antonio Neri, HPE's executive vice president and general manager for the Enterprise Group, wrote yesterday in an online commentary on the company's Web site.
The acquisition will enable HPE to combine both companies' best-in-class portfolios, including HPE's compute solutions and SGI's in-memory, high-performance data analytics technology, to provide customers with sophisticated solutions aimed at solving the world's toughest problems, Neri said.
The combination of the two companies will not only create "one of the most comprehensive suites of solutions in the industry," but will enable SGI's offerings to reach a much wider market thanks to HPE's reach, Jorge Titinger, CEO and president of SGI, said in a statement.
Organizations from film studios and oil companies to banks and governments are finding their operations becoming increasingly data-heavy and complex, a trend that is driving the growing adoption of big-data analytics and high-performance computing.
SGI, which yesterday reported 2016 revenues of $533 million, has come to dominate the high-performance computing market, with customers that include The Genome Analysis Center, PayPal and the National Security Agency.
SGI 'Additive' to HPE
HP Enterprise's acquisition of SGI "makes a whole lot of sense," IDC analyst Steve Conway told us today. "It really is additive to what HPE is doing today."
Conway, a high performance computing analyst, said SGI has developed some "pretty remarkable" technologies with the capacity for large shared memories. "For the most daunting big data procurements, nobody else passes the benchmark tests," Conway said.
Using SGI's technology, for example, the U.S. Postal Service is able to process billions of letters and packages each day, checking each one for postage, fraud and routing instructions in under 100 milliseconds. And PayPal saved more than $700 million in the first two years after it implemented SGI systems to detect fraud in its credit card business.
For HPE, the addition of SGI's portfolio to its own will help the company better serve the growing number of companies in need of high-performance computing, Conway said.