SGI slashes prices, targets wider market

Silicon Graphics Inc., a major player in the military simulation and imaging markets, is taking aim at a broader user base for high-end graphics systems, slashing prices on two Onyx products by up to 45 percent.

Effective immediately, SGI's Onyx RealityStation is priced at $59,900, a 45 percent reduction from $109,900. The Onyx RealityEngine2 costs $118,888, down 40 percent from nearly $200,000. SGI is immediately cutting prices for these products on its General Services Administration Schedule A contract as well.

The new pricing reflects SGI's improved manufacturing and its use of new, more cost-effective technology, said John Burwell, simulation marketing manager at SGI. In light of these factors, "this world-class technology ends up coming down to price points that are deployable to the mass markets," he said.

The single-processor RealityStation and dual-processor Onyx RealityEngine2 are both based on the 64-bit R10000 chip and RealityEngine2 graphics technology and come with 16M of texture memory.

The pricing comes four months after SGI introduced the i-Station and Onyx InfiniteReality systems, which use SGI's new top-of-the-line InfiniteReality graphics subsystems. SGI offers the new products at roughly the same price as the RealityEngine2-based systems.

SGI appears to be responding to various market pressures, including the introduction next month of new graphics system technology from Hewlett-Packard Co., industry analysts said.

The vendor also tends to cut prices, if not always so drastically, to reduce inventory before introducing new products, analysts said.

Whatever the rationale, the price cuts could open the spigot for business from potential customers who could take advantage of Onyx capabilities but previously could not afford the cost, said Terry Bennett, an independent consultant based in Portland, Ore. "They've built an appetite that is doing them a lot of good," Bennett said. "Suddenly [Onyx] becomes viable in a lot of places where you wouldn't have thought of before."

SGI also anticipates increased volumes from established customers, particularly in simulation-based training, Burwell said. "Instead of building five trainers, they can build 10. Or they can look at putting high-end imaging on that device; they couldn't do that before because they didn't have that in the budget."

These new price points, however, may not be all that new for most customers, said Richard Fichera, vice president of research at the Giga Information Group, Cambridge, Mass. "What they tend to do [is] discount the system on a case-by-case basis," Fichera said. "Anybody who wants an Onyx can probably get that price today."