Rackable Closes Deal: Meet The New SGI

Rackable Systems, now known as Silicon Graphics International, or SGI, early last month said it planned to acquire substantially all of SGI's assets for about $25 million plus the assumption of certain liabilities related to the acquired assets.

The acquisition came the same day SGI filed for Chapter 11 bankruptcy.

SGI has been a troubled company for some time. The company declared Chapter 11 bankruptcy in May 2006 but emerged from bankruptcy later that year.

Despite its financial condition, SGI still had a stable of midrange and high-end servers and storage devices along with clustering technology. The company was one of several vendors that in March unveiled a line of servers based on Intel's new Xeon 5500 Nehalem processors.

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George Skaff, chief marketing officer of the new SGI and Rackable's former vice president of worldwide marketing, said taking the SGI name was a lot easier, and better, than adopting the multiple combinations of Rackable and Silicon Graphics names considered.

"Instead of racking our brains coming up with something new, we decided to use 'SGI,'" Skaff said.

Skaff said the combined company is getting the SGI moniker because the name has value despite the challenges SGI has faced over the past few years as it fell from its position as a well-known provider of some of the highest-performing graphics workstations into a couple of bouts of bankruptcy.

"We looked at the risk vs. rewards of the SGI name," he said. "There certainly are risks, given what happened in the past few years. But for us to develop a new brand would take too long. SGI is a strong brand name despite the challenges of the past."

Going forward, the new SGI will use the SGI name as a brand for its legacy SGI hardware while using "Rackable" as its brand name for x64 server-based clustering products, Skaff said.

For now, the new SGI is keeping all its legacy Rackable and legacy SGI products, including both former companies' server and storage offerings but has yet to determine how it will integrate the two product lines or the legacy facilities, Skaff said.

That, in part, is due to the speed of the acquisition, which was due to SGI's bankruptcy, Skaff said. "We couldn't afford to do an Oracle-Sun integration where they have three or four months to consider it," he said.

The new SGI will integrate the two companies' channel programs, making it a bigger channel player, Skaff said. Solution providers will have access to the full line of products but will not be forced to take on products they did not use in the past. "But if a partner drops a product line and goes to the competition, we will find out why and try to change their minds," he said.