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High-end computer maker hits bottom

Jeff Tyler May 8, 2006

KAI RYSSDAL: Let’s pause for a second to remember a true high-tech pioneer. Silicon Graphics filed for bankruptcy protection today. Back in the 90s the company was on the cutting edge. Its super-fast computers created the special effects for movies like Jurassic Park. But the past several years haven’t been kind. As Marketplace’s Jeff Tyler reports.

JEFF TYLER: When Silicon Graphics met Hollywood, the result was disaster. The company did special effects for action flicks, like Independence Day.


But as technology improved over time, movie studios shifted to cheaper forms of artificial destruction. Other industries had relied on the powerful proprietary computers designed by Silicon Graphics for everything from pharmaceutical research to oil exploration. But these businesses have also found they could get almost the same computing power from the latest PCs.

Morningstar analyst Mark Lanyon follows Silicon Graphics.

MARK LANYON: If there’s something IT buyers want, it’s cheap boxes that run on standardized hardware. So firms like Silicon Graphics, for all their brilliance, just don’t have a product that’s relevant any more.

Not relevant, even for the biggest computing jobs.

JASON PONTIN: A really good example of this is Google.

That’s Jason Pontin, editor-in-chief of MIT’s Technology Review. He says Google has more computing power than anyone — by some estimates, even more than the US government. So how does the search-engine company do it?

PONTIN: They do it using off-the-shelf PCs linked together into vast networks. You simply don’t need these high-powered work stations any more.

Industry insiders aren’t surprised by the news from Silicon Graphics. The company had already been de-listed from the New York Stock Exchange. Instead, as Silicon Graphics enters Chapter 11, it’s considered symbolic. A sign that computer servers have been relegated to history.

I’m Jeff Tyler for Marketplace.

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