SGI to make channel comeback

Silicon Graphics Canada Inc. has told CDN it plans to use the channel to target the midrange technical computing market with its new 64-bit Altix 350 Linux server.

The server is built on the same system architecture and optimized Linux environment as the Altix 3000 series, which was introduced

at last year’s LinuxWorld.

“”By having a market way wider, we should have many more resellers. Up to now, we had resellers that were very specialized,”” said Claude Morel, manager of channel programs for SGI Canada.

The Altix 3000 supercomputer product line is aimed at five verticals: energy, manufacturing, sciences, government and media.

Customers in these industries include Tata Motors, NASA Ames Research Center and University of Cambridge COSMOS Project.

“”Now we want to attract other partners, like the Infostreams and NexInnovations of the world who are everywhere in the market, selling high-performance computing but to a much wider market than universities.””

While Morel says he has had initial talks with Infostream Technologies Inc. and NexInnovation Inc., no deals have been confirmed yet.

But Morel remains confident that he’s got something to sell to this market.

“”I’m ready to go back to those resellers. Now I have a machine that can support their market,”” he said.

Powered by Intel Itanium 2 processors and scalable up to 16 processors utilizing a global shared memory architecture (the same as the Altix 3000 supercomputer product line), SGI says the Altix 350 offers a solution for technical database servers, departmental servers and throughput clusters that’s somewhere between commodity Linux servers and high-performance computing.

Prices start at US$12,199 and at US$21,599 for a four-processor configuration.

Morel said the Mountain View, Calif.-based hardware vendor is looking to attract more resellers and to offer programs to a new channel in Canada.

Among its 15 resellers here, Morel says seven or eight of them are solution providers, while the rest are made up of integrators and independent software vendors who resell SGI’s equipment.

But Morel says he doesn’t want resellers on every corner either.

“”It’s not a matter of quantity that I want. I want to have resellers who are covering more of Canada and more markets.””

And, according to Morel, fewer resellers means SGI can offer its channel partners better margins than its competitors. Platinum partners (the highest level a reseller can achieve) receive between 30 to 40 per cent.

Alan Freedman, research manager for infrastructure hardware at IDC Canada, says unless SGI has channel partners focused on its niche markets, selling the Altix 350 will be a challenge.

“”They have really focused on media and entertainment and some high-performance technical. You really need specific expertise to be a successful channel partner for those industries,”” said Freedman.

He said SGI would be more successful if it searched and found channel partners serving those markets.

Freedman says the problem is not whether SGI produces strong, quality servers, but whether it can obtain the sales volumes necessary for a successful channel relationship to compete with Hewlett-Packard and IBM.

While Freedman agrees that a channel strategy is the right way for SGI to target customers for the smaller Altix server, he comes back to the question of whether it can attract the customers who, in turn, would help attract channel partners.

In the interim, SGI’s numbers are shaping up.

For its second quarter results, ending Dec. 26, 2003, which were announced on Jan. 21, SGI reported an operating loss of $2.1 million, compared with a loss of $43.6 million in the first quarter of fiscal year 2003.

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Jim Love, Chief Content Officer, IT World Canada

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