TIME: Almanac 1990/1990 Time Magazine Compact Almanac, The (1991)(Time).iso/time/052989/05298900.013

Text File | 1990-09-22 | 6KB | 102 lines

BUSINESS, Page 70

Computer Chip off the Old Block

Genius Seymour Cray and the company he founded split up


    For nearly two decades, the name Cray Research has been
synonymous with supercomputers, those lightning-fast machines used
for everything from locating oil deposits to designing nuclear
warheads. Not only had Cray seized nearly two-thirds of the world
market for number crunchers in the $5 million-to-$25 million range,
but it held exclusive license to sell any machine made by Seymour
Cray, who is to supercomputers what Alexander Graham Bell was to
the telephone.

    Now Cray and the company he founded have decided to go their
separate ways. In an unexpected move, the firm announced last week
that it was splitting into two rival entities: Cray Research, based
in Minneapolis, and Cray Computer, based in Colorado Springs and
headed by Seymour Cray. The new company, financed with $150 million
in cash and equipment from its parent firm, will devote itself to
developing the long-awaited Cray-3, a computer that will compete
head on with the next generation of supermachines produced by Cray
Research. "It's a stunning development," says Gary Smaby, an
analyst with Needham & Co. "For a company to set up and fund a
direct competitor must be unprecedented."

    The dramatic breakup was the latest of several surprises that
rocked the intensely competitive industry this spring. In April
NEC, one of Japan's three supercomputer makers, announced a machine
it claims is eight times faster than the speediest Cray. A week
later Cray's crosstown rival Control Data declared that after five
years and $238 million in losses, it was closing its supercomputer
subsidiary, ETA Systems. That left Cray as the last U.S. company
still racing the Japanese for pre-eminence in what both countries
view as a technology critical to the future of science and
industry.

    All this made the U.S. supercomputer effort even more dependent
on one man: Seymour Cray. At 63, Cray is one of the most enigmatic
figures in computer science. A restless, rugged individualist of
legendary idiosyncrasy (for many years he made a point of building
a new sailboat every winter and, inexplicably, burning it in the
fall), he has devoted his professional life, first at Control Data
and later with his own firm, to building the world's most powerful
computers. His track record: an unequaled series of five major
computer designs dating back to 1960, each for what would be the
fastest machine of its time.

    The Cray-3 was to be his most impressive to date. People who
have seen prototypes describe it as a technological tour de force.
To minimize the distance electrons have to move within its
components, Cray is squeezing chips capable of 16 billion
calculations per second into a tight octagonal package 32 in.
across, the size of a small coffee table. The computer's basic
building blocks are 4-in. by 4-in. modules each bejeweled with
1,024 chips and threaded with more than a million interconnects of
braided gold wire thinner than a hair.

    But designing a supercomputer and getting it to market are two
different things, and with his latest machine Cray may have pushed
the technology one step too far. Not only does the 16-processor
Cray-3 contain four times as many central calculating units as the
Cray-2 (an increase that more than quadruples its complexity), but
it relies on an as-yet-unproved technological advance: replacing
silicon chips with faster ones made of gallium arsenide. Add to
Cray's headaches the fact that his new computer is so compact that
assembly by hand is difficult. Before production could begin, he
would have to endow robots with the manipulative skills of a
jeweler or watchmaker.

    Cray Research, meanwhile, has had other troubles. Sales are
sluggish, profits are down and its stock price has plummeted. With
R. and D. expenses growing nearly 35% a year, Chairman John
Rollwagen found himself having to choose between two projects: the
Cray-3 and the C-90, an extension of the company's bread-and-butter
Cray Y-MP line.

    As Rollwagen tells it, the decision turned on a chat he and
Cray had four weeks ago in Colorado Springs. "I said to him, `It's
not working, is it, Seymour? It isn't feeling right.'"  The two
discussed options short of a total split, but Cray kept pressing.
"It's almost like he forced me to turn the page," says Rollwagen.
"He said, `Isn't there (an option) that would be even cleaner?
Let's get on to that one.' It just became very clear to the two of
us that this was the right thing to do."

    Reaction was swift. On Wall Street Cray's stock fell 10% in
one day. In Japan some thought they smelled a "political maneuver."
Since U.S. agencies like to have at least two bidders on any
contract, the exit of ETA opened a window of opportunity for Cray's
Japanese rivals. The Cray split, they suspect, may have been
designed to close that window. Cray officials do not deny it.
Chuckles one: "They got the message in a hurry."

    Surprisingly, given the relative sizes of the two Crays, some
experts voice more concern about the future of Cray Research than
they do about Cray Computer. Few doubt that the smaller spin-off
firm will be able to raise all the money it needs. As John Sell,
president of the Minnesota Supercomputer Center, puts it, "Seymour
is magic in this business." Whether Cray Research can flourish
without its founding genius remains to be seen. Analysts say that
within three to five years it should be clear whether the company
has wisely cut its losses or created a killer competitor by trading
away its most valuable asset.