We’ve had a couple of conversations with the very affable
Greg Estes, SGI’s VP of Corporate Marketing, over the past couple of months. Here they are patched together. Greg talks to us about SGI, Hollywood, tough financial times, Linux, and everything. On related news, SGI now owns a… world record.
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.
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.
12. Being flooded with resumes is usually a good indicator of a company’s health.
Greg Estes: We have an awesome culture here. When we lost our momentum we attracted a lot of people that were interested in helping SGI. Now that things have improved, we’re attracting another crowd of people.
We have a reputation as a great place to work. Maybe I’m not objective about this. Once you’ve worked with Steven Spielberg and Stephen Hawking and people who change the world, it becomes difficult to think about going to work for some search engine.
13. How long have you been with SGI?
Greg Estes: I’ve been with the company for 12 years. I originally came here to be the “video-guy” working with the HDTV initiative. Then I went on to be a project manager with the Onyx line. After that I went on to high-end graphics and high-end broadband applications.
14. What’s on your desktop?
Greg Estes: Right now I have an SGI 1600W Flat Panel and a Dell laptop. The laptop is running NT4 with service pack five. Words can’t describe how much I hate it. I’m more of a Mac and IRIX fan. Sales and Marketing people are typically using Windows 2000 or NT.
For our own product line, SGI is now a Microsoft-free environment. We’ve discontinued our money losing IA32 product line, where we never should have been in the first place. We can’t compete with giant companies in that market. You’d think that would have been obvious to us, but it wasn’t. The margins are brutal. The competition is good enough, and you can be out distributed and out marketed by Dell. Besides, on NT you can’t innovate, at least not like you can on IRIX or even Linux.
15. I remember seeing an Origin in a server room one time. People were gathering around the thing to get a look.
Greg Estes: Yeah, we make good machines. Our workstations are consistently rated the best.
16. Do SGI engineers swagger around the halls?
Greg Estes: Not just inside SGI. It really happens with our customers. If you’ve got a $200, 000 SGI Onyx machine as your machine, you’re damn good at your job. I’ve been to post-production houses where they’ve got their Onyx in the lobby in a plexi-glass booth, where it’s lit from underneath and it looks great. It’s a point of pride for them, a sign that they are a contender.
17. SGI customers are different?
Greg Estes : Our customers are probably similar in devotion to the Mac users that Apple has. I don’t think that people walk down the halls where they work and high five each other saying, “Hey, I just got a Dell!” It just doesn’t have the any ring, does it?
18. What kind of representation does SGI have in Comp/Sci programs or at technical colleges?
Greg Estes: Here’s two answers to that question: It’s really, really good, and it’s almost non existent. Depending on what the CS program is geared towards. If you’re in a CS program that has an emphasis on graphics and modeling SGI is all over the place. Whereas you won’t find us at a school that promotes what students really need to understand basic networking and IT infrastructure. You can find SGI being used at McGill University and Sheridan College, or at Stanford University where they’re trying to break new ground in medical imaging. A lot of schools don’t have much money to spend and there’s a lot of competition because it’s not a big market. Kyoto University recently bought a 768 CPU machine for bio-informatics. I would suspect that there are 10 times as many places that don’t have SGI machines set up than places that do.
But, it really is important that we maintain a good reputation with kids coming out of schools. We have an educational discount program, to drive those programs into the educational committee.
19. Would it be out of line to call SGI a boutique computer company?
Greg Estes: We’re probably the world’s only $1.5 Billion computer company. It seems that computer makers are either huge or somewhat smaller than us, say in the area of $400 million. In the broader market, it’s important that we stay focused on our core customers.
Because of our specialties we can’t be considered a baby version of HP or IBM. And nobody here has any interest in working for HP or IBM. Or Sun, God forbid. Those companies are trying to solve different problems for their customers. In some IT situations decisions might go MS, then Sun, then MS and then back to Sun and then back again. But when a CIO or CTO makes a decision to use SGI and IRIX they’re making a clear decision to build a genuine advantage. They use SGI at the core of their business. We are at the strategic strikezone of our customers.
20. Who are your core customers now?
Greg Estes: We target five specific markets or industries:
1)Defense and Government
2)The Collective Sciences: bio-informatics, chemistry, medical imaging.
3)Manufacturing, the automotive industry and aerospace industry. We have 17/17 of the top automakers as customers
4)Media, Hollywood, but also Network television for such things as media serving, digital asset management and on-air graphics for special events like the Olympics or in the production of virtual sets.
5) The Energy industry, which is more or less the Oil&Gas industry.
This is a good example of the importance of turning raw data into good decisions. When you’re deciding where to drill your next well you want to be right, because that can be a $45 Million mistake.
We have an impressive array of customers who prefer our products. Jaron Lanier , a pioneer in virtual reality development does a high percentage of his work on SGI machines. Stephen Hawking is a reference customer of ours. Anyone can look at what our customers are doing in post production and the whole digital image revolution.
21. Is that the SGI elevator speech?
Greg Estes: Sort of. This could be redundant. At SGI our focus is on just technical and creative customers in five markets: government and defense, sciences, manufacturing, media and energy, in the areas of high-performance computing, visualization and complex data management where they gain insight from data. Our customers use SGI at the core of their business. We are at the strategic strikezone of our customers.
22. Do open source projects and contributions suffer during hard times?
Greg Estes: We’re very keen about participation in Linux community. Releasing XFS to the community is a great example of our commitment. However, there are things that Linux doesn’t do that IRIX does. But IRIX has received a lot of intense focus for a long time. I think the most CPUs you can run on a Linux system is 16, while on IRIX it’s 1024. If a client is looking for the kind of power and extraordinary throughput that 1024 CPUs offers, Linux isn’t an option, nor is any other OS for that matter. We’re it.
23. SGI is a company that seems to influence technology far beyond it’s range of customers.
Greg Estes: We are creating the technology that is behind the greatest breakthroughs in the 21st century. You could look at the whole 3D graphics industry, NVIDIA, ATI. We brought 3D graphics to the industry. Not to mention OpenGL, which we licensed to the industry. The graphics industry wouldn’t have come about without SGI.
You can see our influence in the next generation of 3D Graphics with our Reality Centers. We use the term Reality Center for a variety of immersive and non-immersive technologies. Typically, it’s a bank of three large screens that cover the peripheral vision, are powered by three Onyx systems and are seamlessly edge integrated.
24. You’re also making a big push for Visual Area Networking (VAN).
Greg Estes: I think that we’re really onto something with VAN. I don’t think that we knew what we had when it was being developed. It was something that customers were telling us that they wanted, the ability to access their Onyx work station remotely. We’re shifting pixels around instead of data, with this extraordinarily thin client.
25. And how is VAN being received?
Greg Estes: Well, if you were an IRIX ISV suddenly the usability of our big machines, and by extension your product, has been extended and a new market is now available. And you can access this new opportunity on NT, Linux, Solaris Mac or PalmOS machines without porting code.
26. Greg, the Linux Journal article was pretty harsh at points. How did it go over at SGI?
Greg Estes: It was disappointing. It felt as if some of the statements were taken out of context in the entire article. It’s disappointing because ILM is an Oscar winning customer at the top of their game and they have a long history of being successful with IRIX and SGI equipment.
It sounded like opinions coming from a different viewpoint, rather than someone who has had a lot of success with SGI.
What I must say about ILM is that in our experience they’re the brightest, most talented and honorable people you would ever want to work with.
That’s why it’s curious to hear these comments disparaging our equipment versus other alternatives.
27. The adoption of Linux in Hollywood seems to be a popular story for the press.
Greg Estes: It’s very easy for the press to say that customers are switching from SGI hardware to Linux on Intel IA_32 machines. Much of the move is amplified by vendors in this market space; however we have a ton of
customers using SGI equipment in Hollywood.
Our competitors are simply putting as much in the air about their success as we do about ours.
28. Is Linux a growing force in Hollywood?
Greg Estes: Linux in Hollywood? Absolutely. Absolutely.
A good animator can do good work on a Linux system. What studios need is for their animators to use the industry standard tools. And for those companies that can afford R&D departments like the big studios, they also need the
ability to build their own tools, and do their work on as cheap a platform as they can afford. For a while SGI was the cheapest that would provide the necessary power. That was until commodity based systems advanced enough to
perform adequately for some of those tasks.
29. Why is Linux so popular in this market space?
Greg Estes: I think the technology_focused customers in Hollywood are pretty glad that they don’t have to move to NT because it’s pretty tough to innovate on NT, especially in graphics and that’s precisely what the film
I should point out that there is a lot of stuff in IRIX that isn’t in Linux. That’s why people such as the Visual Effects Society (among others in the FX world) want Linux to do what IRIX can do and they want all of it from one
company. And no one company is doing that but SGI.
31. And IRIX is still satisfying customers?
Greg Estes: Absolutely. PCs are getting more capable, but many, many customers still use IRIX everyday. Even at ILM _ every single frame goes through an SGI machine at some point.
32. Commodity PCs have advanced thanks to Moore’s law. How does the law apply outside x86?? development?
Estes : Moore’s Law is fundamental. It says that on a specific date you know that for, say, $3000 you can get a machine with X amount of computing power. That’s great. But what if you are a computer maker and don’t offer a
machine in the $3000 range?
That’s an important thing to consider, because it turns out that, Moore’s law also holds true for all price ranges. So if you’re customer that is looking for, say, $50,000 of computing power there is product available at that range and it will have progressed in terms of power just as much in relative terms as the $3,000 system.
As computing power improves through the whole range then higher end vendors will lose market to cheaper alternatives. However, there are also problems that become more approachable to higher end machines.
PC makers could find that people who might have bought a PC for email and scheduling can do those things very well with a $200 PDA. The market drops out for all computer makers at some point. This is the natural order of
things. It’s not that we’re losing to the competition; we’re not even trying to compete for those seats. We’re chasing new parts of the market that require higher_end processing, visualization and data storage.
33. So what now?
Greg Estes: We’re trying to solve different problems now. But what we’re working on is determining where SGI fits into the workflow, and that position is constantly shifting. Where we excel is in areas like high_definition visualization, or work in digital dailies or ongoing display rendering, like inferno and flame style editing.
Recently we’ve seen a shift from volume Maya desktops to higher_end machines able to manage all the systems in the facility. Solutions like (storage area networks) that can be used by anyone in an organization whatever client
they’re using, and at Fiber Channel rates.
One really good example of our new customers is Efilm, the result of a partnership between Deluxe Laboratories and Panavision. EFILM uses SGI IRIX visualization systems, storage and high_speed connectivity to produce high_resolution digital distribution masters that can be used for film output, digital cinema releases and home video.