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1. Why the close relationship between SGI and Hollywood?

Greg Estes: We’ve been targeting this industry for 20 years and not necessarily just for the revenue it brings us. SGI lives and dies by being at the forefront of the computer industry.

Unlike our competitors, we only target technical and creative users such as; in the Arts and Sciences We don’t target Enterprise users.

We focus on the technical cutting edge. This makes for strange bedfellows, but Hollywood and the defense industry constantly push the boundaries of technology. They are never satisfied with good enough and that’s really healthy for us. They ask for things years before it shows up in another marketplace—they keep us on the leading edge.

Let me put it this way, our first customer was NASA, and our second was Disney.

2. And it works. This past Academy Awards was another big night for SGI, wasn’t it?

Greg Estes: Well, we’re thrilled that our customers won again. This marks eight straight years that all the winners and nominated films used SGI systems. That speaks for itself.

3. Do SGI engineers root for one customer over another?

Greg Estes: Clearly we were pulling for all of our customers and that’s everyone that was nominated. We’re thrilled for all our customers and are happy with the recognition that they are receiving. Also in the new category of animated feature films.

4. That was a spectactularly diplomatic answer.

Greg Estes: Thanks. But, it’s true. One of the coolest things about working with these people is the way they push the envelope. They are among the most technically astute and at a level where they push the bounds of computers. A lot of their work is done by code written in-house on IRIX. If our customers didn’t like our OS they would probably write one of their own. It’s a technical and discriminating audience.

5. Are there perks to working with Hollywood?

Greg Estes: It’s a fun sector to work with. But we really get huge satisfaction seeing what our customers do with our machines. We’re pretty humbled by their talent. So we continue to build the best tools for these artists and animators. They ask us for things years before they might show up in another market.

6. Such as?

Greg Estes: They were pushing us to support HDTV back in 1990. So SGI machines have supported HDTV for 12 years. They wanted high-quality, high-res movie preview striped across a RAID setup. Today people are pretty used to putting a DVD into their player and great watching a movie at high resolution. Now try doing that at six times the resolution and then try doing it six years ago. And that’s what SGI does.

7. Can SGI still provide the future for Hollywood?

Greg Estes: I have two answers for that question. We are absolutely under attack. This is not a large market but it has a lot of prestige.  It seems that every 18 months IBM announces that they have plans to move in and take over this space. Then nothing happens. And now HP has a full court press going around Linux. But not much has come of that yet.

So, why buy an SGI machine when any image you can make on one of our machines can now also be made on a Mac? A lot of the answer has to do with how much interactivity other environments offer, and how long it took to make those images. So, the interactivity is key. The second point is our expertise in the market. Just before the Academy Awards, John Labrie of Weta Digital was over here talking to the press. When he was asked about why he works with SGI, he didn’t mention how well our system scales or anything like that. His answer was that when he talks with SGI we actually understand where he’s coming from—that SGI understands his business better than any other computer company.

People can do good work on a PC or a Mac or whatever, but our track record, with the world’s best animators and a string of Oscars winning customers speaks for itself.

8. Some of these images are being made with Alias | Wavefront products. How do they fit in to the whole scheme of things?

Greg Estes: We treat Alias | Wavefront as a very separate company. It is a wholly owned SGI subsidiary and they’ve done a tremendous job of capturing market share. Since we purchased Alias and Wavefront we had to go to partners like Discreet and SoftImage and make sure that they were comfortable maintaining their ISV relationship with us. It’s just that kind of world.

9. Where did SGI’s downtimes come from?

Greg Estes: It seemed that at times in the last couple of years, I had to remind people that the name of the company wasn’t ‘Financially Troubled SGI.’ To go from a few cents a share just after 9/11 to flirting with $5 a share six months later is a great turnaround.

Our problems weren’t really related to the market slump that made the covers of Time or Newsweek. That wasn’t so much a tech bust as a dotcom bust.

We lost focus and leapt into areas that weren’t historically our strength. Commodity PCs and Intel/NT-based workstations with low differentiation were a market space that we shouldn’t have gone near.

Also, if we had the chance to purchase Cray again...we might reconsider the way it was done. That was a difficult merger. SGI has sold off the Cray vector business, but we’ve kept some great IP and great engineers.

So, in a nutshell, with much over simplification, we lost focus. Our expenses were greater than our revenue. We had to trim down the unnecessary expenditures. A lot of credit goes to Bob Bishop for settling SGI down and fixing our focus. He took measures to move us back in the right direction. He took arrows in his back at points, but you can right the ship, and we’re very close to doing it. We hear that straight from our customers.

10. How is morale at SGI now?

Greg Estes: Morale is good, kind of like we’ve all been through something significant that forged a greater bond between us. I don’t think that the hit we were taking was the same as all the other tech companies. During tough times Ford might put off building a new website. But they can’t put off the new crash analysis of the 2005 Explorer, and that’s where we would come in.

11. Are you still attracting a lot of talent?

Greg Estes: I had an opening for director of product marketing that we posted on Friday and by Monday morning I had 107 resumes in my inbox.

1. "First Part of the Interview"
2. "Second Part of the Interview"
3. "Third Part of the Interview"