SGI's Future: Storage?

9:45 AM -- So, it looks as if SGI's spell in Chapter 11 may be coming to an end, as the firm puts its financial house in order three months ahead of its initial schedule. (See SGI Looks to Exit Chapter 11, SGI Plans Reorganization, and SGI Opens Chapter 11.)

SGI CEO Dennis McKenna has already identified storage as key to the vendor's future prospects, recently telling Byte and Switch that he wants to grow the firm's storage business from 15 to 25 percent of revenues next year. (See SGI Looks to Jump Chapter.)

This decision could be crucial if the vendor wants to avoid repeating the financial turmoil of recent months. Although storage currently accounts for only a small part of the SGI business, bolstering the firm's storage story is a shrewd move. "Their storage business certainly has more margins than the server side of the business," says Tony Asaro, senior analyst at the Enterprise Strategy Group.

This makes perfect sense. SGI made a name for itself selling heavy-duty servers into the high-performance computing space, but just how often does your average government research lab or university need to overhaul its server infrastructure? Storage, of course, is a different story, with users continually struggling to keep up with the data explosion. While there has been the uncertainty about overall IT spending, storage and security remain healthy. (See Uncertainty Shadows IT Spending.)

Initial signs, at least, suggest that the SGI storage ship remains steady, despite the events of the last few months. "Their business is rolling right along," says Bob Woolery, vice president of product marketing at SGI's storage OEM partner DataDirect Networks. "Working with them, it has been business as usual," he adds.Details of SGI's storage master plan could prove interesting in the coming months.

James Rogers, Senior Editor, Byte and Switch