SGI turnaround pinned on Intel

Alliance no threat to Intel-powered server market, says HP.

Eleven weeks after leaving Hewlett-Packard, Richard Belluzzo, Silicon Graphics' (SGI) CEO, has signed a cross-licensing deal with Intel as the major component of a corporate turnaround.

"This plan is all about change," claimed Belluzzo, the former HP number two. "SGI is not folding to Wintel. We will deliver the Intel technology around our existing infrastructure."

The cross-licensing deal allows SGI to develop custom chips inside its Intel-based machines to soup up their performance. Intel gains the freedom to design its own graphics technology in chips, without fear of an SGI lawsuit.

"This is big business for both sides," said Craig Barrett, CEO at Intel.

"SGI will bring a great graphics architecture to Intel to create a winner giving end users more capabilities."

HP's technology marketing manager, John Saw, doesn't view the alliance as a threat to the Intel-powered server market. "To support Intel processors, you have to design the circuitry yourself. HP is already doing this. The breakthrough will come with Intel's 64-bit architecture chipset which is being developed by HP."

Saw sees the alliance as a means of SGI gracefully abandoning its Mips chip arm whilst it can.

Other areas Belluzzo addressed included a plan to upgrade graphics within SGI architecture every 12 months, quadrupling the current cycle, and a commitment to Irix, SGI's Unix operating system, with real-time graphics capabilities outlined as a future project.

SGI will also adopt industry standards and embrace "mainstream" technologies, with Microsoft singled out as a partner. Belluzzo confirmed that SGI and Microsoft will collaborate on Fahrenheit, a system that allows applications to run across both Unix and Microsoft architectures.

INTEL: WEAK SALES LEAD TO JOB CUTS

Intel has announced weak first quarter earnings and revealed that around 3,000 international positions will be lost during the first half of 1998.

Staff levels will be cut by halting recruitment and by not replacing staff who leave.

The company recorded sales of $6bn for the quarter ending 31 March, down seven per cent on the same period last year.

"Although the figures are down, we still made a $1bn profit. These results are just a blip caused by the PC industry getting ahead of itself, but things are starting to balance," said a company representative.

Intel denied it was losing market share to rival manufacturers Cyrix, IBM and AMD. It has also unveiled two top-end Pentium II processors running at 350MHz and 400MHz.