Anticipation

Much has changed in a year. Last year, a number of companies such as Orion were on the rise and the darlings of the event. Companies such as my former employer SGI had a strong presence, reasonable revenues, and there were thoughts of a possible turn around. Startups that garnered far less attention than they deserved, such as Ammasso were there in a limited fashion. Other startups (mercifully unamed) that had something of a flash-in-the-pan quality to them seemed abundant.

About one year later.

Ammasso is done. They burned through their VC money, and for whatever reason, could not get more investment.

Anyone remember RLX? Their idea was low power, in both senses of the word, processors from Transmeta, running Linux, as a cluster solution. They arrived at clusters after the bubble burst in 1999-2000 time frame. Unfortunately, they were (at the time) a solution looking for a problem. A fairly typical dot-bomb story, though they had a business plan that may have made sense. RLX sold its assets to HP some months after jettisoning all its hardware efforts.

Orion is … well, not done … but in something of a pickle. They needed to re-align their expenditures to be in line with their revenues. This is usually the point at which the VC’s have said “no more money until you start showing traction.” This is very hard for a new company to do with a new product. You have to win over converts. This is made especially hard by a forced re-engineering transition in the new product offering due to one of their suppliers (Transmeta) effectively exiting the market for processors. This would be a huge challenge for a profitable company. It can wreak havoc with a startup that is trying to convince customers that they will be there tomorrow. Hard to do if your suppliers go away.

SGI … I cannot say enough good things about the people I worked with there. SGI was in trouble when I left in 2001. I couldn’t stomach the decision to get out of the cluster market then. This was right before the cluster market really started taking off. Curiously enough, this was about the same time that the symmetric multiprocessor (SMP) market, then SGI’s mainstay at the time, accelerated its inexorable march to niche status. SGI exemplified the “retreat to the higher end market” view, which in retrospect, has never been a successful strategy for any company that I am aware of. SGI was delisted from the NYSE this past week. They are losing good people in droves. The problems that SGI has are multi-fold. No, I won’t go through them. Suffice it to say that if they emerge from their perpetual reorganization, they will be a very different company. I think it is long past time to do a management change, as no re-organization could possibly be successful with the same decision makers in place, making the same types of decisions that got them into their dilemma in the first place. Quoting Niven and Pournelle, “think of this as evolution in action.”

It is said that the negative stories are the only news. I disagree.

PathScale has been building up a portfolio of software and hardware to service specific high end markets. A number of other vendors have been building slowly or in stealth mode, and I hope to see/hear more from them at the conference. And maybe I will be able to write about them. Maybe not. Some non-disclosures might prevent this.

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