Seattle supercomputing company Cray (NASDAQ: CRAY) is cutting about 50 jobs as it reconfigures its employee mix, according to a regulatory filing. The company didn’t specify what types of jobs were being cut, or say where they were located, other than to indicate the losses aren’t concentrated in any particular place or category.

Cray’s headquarters are in Seattle and its two other major domestic facilities are in St. Paul, MN, and Chippewa Falls, WI. Cray said the layoffs would be “substantially offset” by future additions in key areas including software development and custom engineering. Cray said those hiring plans mean its overall headcount will stay roughly flat this year. It looks like the news was first reported locally by The Seattle Times’ Brier Dudley.

Spokesman Nick Davis says Cray had about 885 employees total at the end of 2010. The company’s job-posting site shows four jobs currently open in Seattle: director of compensation and benefits, financial analyst, senior product marketing manager and a software developer.

“We need to hire a significant number of employees in critical areas of the company to deliver on our growth plan, and we couldn’t do the hiring we need on top of our current cost structure,” Davis says. “This is a very difficult decision for us. We are working very hard to provide the support for those people who are directly impacted.”

Cray, a historic giant of the computing business, was on our radar screen quite a few times in 2010 as it continued to rack up large contracts worldwide. That included about $60 million from the University of Stuttgart, a $25 million partnership with Nvidia for DARPA projects, and $47 million from the Department of Energy.

Comments | Reprints | Share:          

Seattle-based supercomputing company Cray (NASDAQ: CRAY) has inked a contract deal with the University of Stuttgart, to deliver two supercomputers to the University’s High Performance Computing Center Stuttgart (HLRS). The multi-year, multi-phase contract is worth an estimated $60 million. The first phase of the contract will take place in 2011, during which the Cray XE6 supercomputer will go into production at the university. The second supercomputer, the next-generation Cascade, will be delivered to the university in 2013. Cray says the Cascade is made possible, in part, by the company’s participation in the Defense Advance Research Project Agency’s (DARPA) High Productivity Computer Systems program earlier this year.

Comments | Reprints | Share:          

Seattle-based supercomputing company Cray (NASDAQ: CRAY) is part of a team that has been awarded a $25 million U.S. Defense Advanced Research Projects Agency (DARPA) grant for the further development of supercomputer technology.

The team, led by graphics processing unit (GPU) developer Nvidia (NASDAQ: NVDA), also includes Oak Ridge National Laboratory and six U.S. universities. According to a statement released Monday, DARPA is funding the project “to address the challenge that conventional computing architectures are reaching the practical limits of energy usage.”

The four-year research contract, part of DARPA’s Ubiquitious High Performance Computer program, will finance the development of GPU software and hardware technologies needed to equip a new class of supercomputers that could be 1,000 times more powerful than the best supercomputer in existence today—dramatically increasing computing performance, programmability, and reliability.

Steve Scott, Cray’s senior vice president, chief technology officer, and principal investigator on the team, said in a statement that the DARPA program “is attacking technical issues that are key to the future of high performance computing,” and could lead to “radical improvements to the state-of-the-art in the coming decade.”

Cray has had a long history of ups and downs in the supercomputing sector. In the second quarter of 2009 the company reported $62.7 million in revenue. Despite inking a number of extensive deals in 2010—including a $45 million Department of Defense contract, a $45 million National Nuclear Security Administration (NNSA) contract, a $20 million deal with Brazil’s Foundation for Space Technology, Applications and Science, and a $47 million Department of Energy contract—Cray reported only $28.7 million in revenue in the second quarter of 2010.

The company attributed the fluctuation in revenue to the recent rollout of its XE6 supercomputer, adding that it expects higher profits for later in 2010.

“I remain very excited about our 2010 prospects, led by a number of significant wins and continued strength in custom engineering,” Cray president and CEO Peter Ungaro said in a statement last week. “[We] are in the midst of one of the largest production ramps in our history. In fact, in a five month period this year, we expect to ship over six-times more compute power than we did in all of 2009.”

Comments | Reprints | Share:          

As I reflect on my time in the Northwest, I find myself gravitating toward the bigger picture: which areas of technology and business innovation is this region poised to really own over the next few years? After giving us the likes of Microsoft, Amazon, Boeing, McCaw Cellular, and Starbucks, surely Seattle is ready for an encore or two?

It’s a topic that comes up often in tech startup circles. For example, on Tuesday, TechFlash put together a provocative panel and town hall discussion on the future of startup financing—but it ended up being about much more than financing. I wish I could have been there, but I’ve been on the East Coast this week.

During the event, the founders of Avvo, BigOven, BuddyTV, Jackson Fish Market, Wetpaint, and other prominent Seattle Web startups talked about the various tradeoffs between bootstrapping, taking angel money, and venture capital. I reported on this topic back in late 2008, and things haven’t changed all that much since, although company valuations are lower and it seems like more entrepreneurs are bootstrapping out of necessity.

One point of discussion in particular caught my eye from the TechFlash writeup of the event: the need for entrepreneurs to think bigger, balanced against giving up equity to VCs. “I don’t see how the small-time thinking of ‘I want control, I want control, I want control’ is going to create the incredible successful outcomes that not only Seattle needs but our industry needs in a time of change,” said Ben Elowitz of Seattle-based Wetpaint.

Entrepreneur and investor Andy Sack, from TechStars, RevenueLoan, and Founder’s Co-op, had a bit of a conflicted take on the venture capital industry, according to the report. He called the business “a racket,” but also said VCs are misunderstood in the entrepreneur community. In the end, his main message was consistent with Elowitz’s. “I think as a community Seattle has fallen behind other cities, and as a community we need to stop whining and start kicking some ass,” Sack said.

Michael Arrington of TechCrunch concurred, talking about the success of companies like Twitter, and the importance of dreaming big: “Where are the people here in Seattle saying, ‘We want to be the pulse of the planet’?” he asked.

Here’s where I stand: I think it’s mostly a cultural issue. Seattleites tend to be more reserved and laid-back than their counterparts in Silicon Valley or Boston. And they are a bit more isolated from the rest of the world than those other geographies. That doesn’t mean they don’t want their startup to rule the world (it might even be an advantage). And in fact, lately I’ve been thinking about the ways in which Seattle tech startups could rule the world. These are my five best guesses at the moment:

1. Alternative financing schemes

Seattle is quickly becoming an epicenter of new models and structures for financing … Next Page »

Comments (1) | Reprints | Share:          

Seattle-based Cray (NASDAQ: CRAY) said today it has been awarded a multi-year, $47 million contract from the U.S. Department of Energy to provide supercomputing products and support services to the National Oceanic and Atmospheric Administration and Oak Ridge National Laboratory. The machines will be used for advanced climate modeling and research. Under the terms of the contract, Cray will first deliver an XT6 machine, which will go into production later this year, followed by a next-generation supercomputer codenamed “Baker” (plus upgrades to the XT6) in 2011.

Comments | Reprints | Share:          

Engineers are not salespeople. They are certainly not sound-bite machines either. If they were either of the above, there would have been a flurry of media stories coming out of Seattle this week centered around the National Academy of Engineering’s “grand challenges” summit held here on Sunday and Monday. Maybe that’s why it took me longer than usual to synthesize what I heard into a coherent wrap-up.

Alas, the meeting was probably disappointing to most journalists. But if you are a scientist or a savvy businessperson interested in the future of technology, you should have been there. Its goal was to inspire students, researchers, and entrepreneurs to solve some of society’s most important problems—and it did. But it did so in a unique way—with some very high-level, thought-provoking talks and discussions that went far beyond what I was expecting as a casual observer. (OK, I’ll admit I’m an engineer by training, and still think like an engineer in many ways.)

It’s not exaggerating to say engineers have created the world we live in, and that they hold the future of the planet in their hands. They can also make you a lot of money if you work with them in the right way. A lot of tech entrepreneurs have other ideas, but I think the gap between technology researchers and startups needs to be bridged, for the good of society. This week, local summit organizers Matt O’Donnell, Ed Lazowska, and Bonnie Dunbar took a step in that direction, and got a lot of people buzzing about the future of technology and society.

Without further ado, here is my top 10 countdown of highlights from the summit, which focused on engineering better medicines and advancing tools for scientific discovery in computing and aerospace:

10. Eat broccoli.

During the medicine panel, Buddy Ratner, a University of Washington professor of bioengineering, raised an issue from the audience. “What’s the business model for preventive medicine?” he asked. His point was that companies pour billions of dollars into new drugs, but some of the advances that have had the most impact on improving overall health in society are low-tech things like washing hands before doing surgery, providing people with clean drinking water, and eating broccoli to help prevent cancer.

9. The new drug pipeline is broken—except when it’s not.

This was a point of contention on the panel. Lonnie Edelheit, former senior vice president of R&D at General Electric, argued that “if we don’t worry about cost, it’ll stay confusing until the system breaks completely.” Nicholas Peppas, chair of biomedical engineering at University of Texas at Austin, countered, “I don’t think the system is broken. It is still an excellent system, it works relatively well. This country has produced most of the great drugs and made them available at relatively low cost.”

8. Not everyone loves Dendreon.

Seattle’s biotech darling, which just made history by winning FDA approval for a new kind of prostate cancer drug, has its share of detractors. In discussing how to fix the drug pipeline, Bruce Montgomery, senior vice president at Gilead Sciences, said, “The problem is the reward system for … Next Page »

Comments | Reprints | Share:          

Seattle-based Cray, the supercomputer company, announced today it has been awarded a multi-year, $20 million contract with the Foundation for Space Technology, Applications and Science in Brazil. Under the terms of the contract, the company will deliver a Cray XT6 supercomputer to Brazil’s National Institute for Space Research, to perform weather forecasts and climate studies; the computer will go into production later this year. Cray (NASDAQ: CRAY) has won a series of large government contracts, both foreign and domestic, in the past year. Last July, Cray CEO Peter Ungaro gave me a detailed overview of the company’s strategy, shortly before it posted a surprise profit for the second quarter of 2009.

Comments | Reprints | Share:          

John Gilleland’s first day on the job was a little different from most people’s. The nuclear physicist showed up at Intellectual Ventures in Bellevue, WA, and sat down at the conference table with his new boss, CEO Nathan Myhrvold, and another, shall we say prominent, techie.

“The guy on my left looked familiar,” Gilleland says. “It was Bill Gates.”

Gilleland had been on the job for all of three minutes when Myhrvold said jokingly, “John, you’re late on your deliverables.”

That was back in December 2006. Gilleland is now CEO of TerraPower, the spinoff from Intellectual Ventures that is focused on creating a fundamentally new kind of nuclear reactor. It’s the invention firm’s biggest research project to date, spinning out as a separate entity in the fall of 2008 with 30-some staff and untold amounts of funding from Gates and other investors. It is a project that Intellectual Ventures likes to cite as a potentially transformative, homegrown invention.

The basic idea is to create a reactor that needs only a small amount of enriched uranium to get started, and then uses depleted uranium (spent fuel) or natural, unenriched uranium to produce the nuclear-fission reactions necessary to generate power for 60 years or more without refueling. The design is called a traveling wave reactor, and the idea dates back to the early 1990s. If it works, the key benefits would be cheaper power, much more plentiful fuel, more efficient nuclear waste disposal, and less risk of nuclear proliferation.

Gates has been gushing about the project as of late. He mentioned TerraPower prominently in his talk at the TED conference in California last month, calling out the proposed reactor design as a possible “miracle” innovation in the effort to provide clean energy to more of the world’s population without increasing carbon emissions in the atmosphere. (Nuclear power provides about 20 percent of the electricity in the U.S.)

Gilleland (see photo, left) has been given the keys to Gates and Myhrvold’s nuclear kingdom for good reason. Previously, he co-founded and led Archimedes Technology Group, which developed improved techniques for cleaning up nuclear weapons waste, among other things. Before that, he was chief scientist and vice president of energy programs at Bechtel, and U.S. managing director of the International Thermonuclear Experimental Reactor (ITER) program for fusion energy, and he spent 16 years at General Atomics doing fusion research.

The traveling wave reactor is certainly an intriguing idea, and one that could be a true breakthrough. But the question, skeptics say, is whether it can be made to really work—and how long that will take. The idea is that the reactor makes its own fuel and uses it as it goes along: the neutrons emitted by a small amount of enriched uranium convert depleted uranium into plutonium, which splits to produce energy and also emits more neutrons that continue to “breed” new fuel. There is no precedent for TerraPower’s particular design, and the project faces some major challenges—technical, business, and regulatory. So far the physics has only been tested in computer simulations, albeit using the most advanced supercomputers available. (It’s worth mentioning that only someone like Gates could afford to fund this and risk having it not work—which is exactly why Myhrvold sees the need for an “invention capital” industry.)

On the plus side, the environment for nuclear power development is more promising … Next Page »

Comments | Reprints | Share:          

Seattle-based Cray, the supercomputing company, announced today it has won three high-performance computing awards from the U.S. Department of Defense, totaling more than $45 million. Cray will provide three next-generation supercomputing systems to the U.S. Air Force Research Laboratory in Ohio, the Arctic Region Supercomputing Center in Alaska, and the U.S. Army Engineer Research and Development Center in Mississippi. Cray (NASDAQ: CRAY) says its technology will be used to support research and development for new materials, fuels, and armor and weapons systems, as well as to assist in long-term weather predictions. The supercomputers are expected to be delivered to the U.S. defense centers in the second half of 2010.

Comments | Reprints | Share:          

[Updated Feb. 9 and Feb. 10 with comments and funeral service/memorial donations details---see below] Xconomy is very sad to note that John Mucci, the co-founder and former CEO and director of SiCortex, the Maynard, MA-based startup that sought to build a new generation of energy-efficient supercomputers, passed away yesterday of a heart attack, according to reports we have received.

Mucci had a long history as a sales executive, and before co-founding SiCortex with Matt Reilly and Jud Leonard around 2003, had been a vice president at Thinking Machines Corporation, where he worked from 1986 to 1994, according to his LinkedIn page. He had also served in several executive positions at Digital Equipment Corp., and had co-founded another startup, TopicalNet (previously known as Continuum Software), according to his bio on the SiCortex site, which is still up although the company announced it was closing its doors last May.

“It is a sad day for all… less competition, unemployed seventy some workers…” Mucci wrote Xconomy in an e-mail at the time SiCortex closed, even though he had been replaced 10 months earlier as CEO. I had not verified the current status of SiCortex at the time of this post.

SiCortex had been funded in part by Polaris Venture Partners. Polaris general partner Bob Metcalfe wrote this in an email tonight: “While working on SiCortex, John and I walked together, he my guide for three years, through the exhibits of the SuperComputing conferences. Everyone there knew and liked John. And I mean everyone.”

Mucci, who had a B.S. from Pennsylvania State University and a master’s degree and a Ph.D. from Carnegie-Mellon University, was reportedly working on a new venture. I could not verify his age by the time of this post.

Update, Feb. 9, 2010: SiCortex co-founder Matt Reilly, who says Mucci was 67 years old when he died, writes this: “John was a man of great enthusiasms, but I think the greatest was building connections with and between people. John didn’t build SiCortex, as much as he knitted it together. As a partner, a coworker, a friend, and guide he gave more than I could ever repay.

John was exploring several new opportunities and ventures at the time of his passing. He will be sorely missed.”

Update, Feb. 10, 2010: The funeral service will be held at 11 a.m. Saturday, February 13th, at First Parish Church in Stow, MA. A wake will be held from 5 p.m.-8 p.m. on Friday, February 12th, at Fowler Kennedy Funeral Home in Maynard.

Memorial donations may be made to the Trustees of Tufts University, Travis Fund for Needy Animals, Office of Development and Alumni Relations, Cummings School Veterinary Medicine, 200 Westboro Rd, North Grafton, MA, 01536; and WBUR Boston, Attn: Susan Tompkins, 890 Commonwealth Ave, Boston, MA, 02215.

Comments (3) | Reprints | Share:          

A new IBM supercomputer opened at Brown University’s Center for Computation and Visualization in Providence, RI, today is 50 times faster than Brown’s next best machine and is the most powerful computer in Rhode Island, according to an announcement from IBM (NYSE: IBM). Researchers at Brown and other institutions intend to use the 1,440-processor machine to model subjects such as the genomes of ocean-going microbes, the mechanics of human and animal movement, and the topography of other planets. Brown ordered the multimillion-dollar supercomputer in June; its exact cost hasn’t been disclosed, but IBM and Brown are calling it “a shared investment.”

Comments | Reprints | Share:          

Well, we can’t all be Amazon. While the Seattle-based e-commerce giant (NASDAQ: AMZN) raked in a $199 million profit for the third quarter of 2009—a 68 percent increase in net income over the same period last year—Microsoft (NASDAQ: MSFT) posted an 18 percent decline in its profits (still $3.57 billion, better than analysts expected).

But beyond these giants of the global tech scene, Seattle has some mid-market public tech companies that we’ve been paying closer attention to lately. That’s because they provide a much more complete picture of what’s going on in the public markets, as well as the mood across different industries like digital media, data storage, and high-performance computing.

Of these local bellwethers, two companies announced modest quarterly profits this week, and two others posted losses but are on the long-term comeback trail. It’s clearly still tough times out there, but here are the highlights:

—RealNetworks (NASDAQ: RNWK), the Seattle digital media and entertainment company, managed to post a surprising profit of $1.5 million for the third quarter of 2009, its first profitable quarter since the first three months of 2008. That’s despite posting quarterly revenue of $140.3 million, a decrease of 8 percent from $152 million in the same period last year (when the company posted a net loss of $4.5 million). RealNetworks reduced its operating costs and formed partnerships with Facebook and Apple over the past few months.

—Cray (NASDAQ: CRAY), the Seattle-based supercomputing company, reported a net loss of $2.1 million for the third quarter. But its revenue was $58.6 million, a 7 percent increase over the same period in 2008. In the second quarter of this year, Cray posted a surprise profit of $3.4 million on the strength of large government contracts and a broader customer base.

—InfoSpace (NASDAQ: INSP), the meta-search company based in Bellevue, WA, posted a profit for the second straight quarter (following three consecutive quarterly losses). Its net income for the third quarter was $1.8 million, based on revenue of $54.4 million, an increase of 38 percent over its revenue from the same period a year ago.

—Isilon Systems (NASDAQ: ISLN), the Seattle-based data storage firm, reported a net loss of $4.9 million for the quarter. The company’s quarterly revenue was $30.5 million, up 1 percent over the same period a year ago, but its net loss increased from $3.7 million in the previous quarter this year. I wrote about nine-year-old Isilon’s efforts to bounce back from some tough times in a profile last week.

On October’s last trading day, the stock market plunged. As Scott E. Marcouiller, a senior equity market strategist at Wells Fargo Advisors in St. Louis, told the New York Times today, “The market is focusing on the glass is half empty…We just needed to let some of the air out of the balloon.”

Comments | Reprints | Share:          

How do you go about summarizing a company’s culture in one word? I haven’t a clue, but whenever I ask CEOs, they always come up with something interesting—and often surprising. In the past couple of months, I’ve been asking top executives at Northwest tech startups to talk about their company culture and why it’s unique. So far, none has refused to play the “one word” game.

I’ve received a fascinating array of responses that speak to the companies’ management styles, the kinds of talent they’re looking for, and their overall strategy—what they think sets them apart from their competition. From Bellevue, WA-based Apptio’s “paranoid” to Seattle-based Picnik’s “easy,” you can see a lot of a company’s mindset through the keyhole of just one word. And last month, Bob did a comparison of Boston vs. Seattle one-word cultures—and found that the New England startups were a little more New-Agey in their responses than companies here in the Northwest. (No idea what this means, but it’s always fun to go up against the East Coast.) And Bruce followed that up by checking in with five San Diego firms.

Now I’m extending the exercise to Seattle’s public tech companies. I wondered whether their responses would show any glaring differences from the startups—more conventional, say, or boring. After checking with a few of them (each has been around for six years or longer), my scientific answer is “not really.”

Our initial short list of public companies spans the fields of supercomputing, data storage, and online advertising. Be warned, Mr. Ballmer, Mr. Bezos, and Mr. Glaser—I’m coming for you too.

Cray (NASDAQ: CRAY)
CEO: Peter Ungaro
Culture: “Next”
Comments: Ungaro says, “Never satisfied with the status quo, our employees are committed to providing our customers with the next-generation of Cray supercomputers. Collectively as a company, our passion is setting new boundaries of what supercomputers are capable of and providing those resources to the world’s researchers and engineers.” He adds, “We celebrate achievements and acknowledge milestones, but we are focused on what’s next and what we all have to do to get there.”

Isilon Systems (NASDAQ: ISLN)
CEO: Sujal Patel
Culture: “Driven”
Comments: Patel says, “We have been through a million different things that show how driven we are. We survived…we grew, we built, we went public, we ran into some nasty roadblocks, we recovered from that.” He adds, “We only get through that stuff because we are driven as an organization—and that’s not about me, it’s about the people in this building.”

Marchex (NASDAQ: MCHX)
COO: Peter Christothoulou
Culture: “Innovative”
Comments: Christothoulou says, “Being innovative is at the core of everything we do; from delivering the most innovative products and technology, to hiring and employing innovative, collaborative people to provide our customers with the best experience possible.”

Comments (2) | Reprints | Share:          

When California Gov. Gray Davis created the California Institute for Telecommunications and Information Technology in 2000, it was part of a broad state initiative that spawned four new centers for science and innovation with a shared mission “to invent the future.” The specific mission for the institute known as Calit2 (Cal IT²), which is based at UC San Diego and UC Irvine, was to “radically expand the capacities of communications and information infrastructures.”

In the nine years that he has served as Calit2’s director, Larry Smarr has done all that and more. He describes the institute as a “collaboration framework” that enables researchers throughout the University of California to take a multi-disciplinary and systems-based approach to complex problems. As a result, Smarr says Calit2 has engaged hundreds of UC researchers, formed affiliations with over 300 federal agencies, and worked with more than 200 industry partners. “I have to say we’re pleased with the progress we’ve made,” he says. (Smarr talks about the origins of the Internet in Part 1 of my story here.)

But Smarr also is looking at the path forward. He tells me he’s spent the past six months “on a vision quest” to identify the large societal challenges that he anticipates the next decade will bring. And if there is a thread that runs through his vision, it is to harness the power of Calit2’s expanding resources—“to build across the successes that we’ve had”—to tackle four over-arching problems of the next decade. These are Smarr’s big ideas for what he calls the digital transformation of healthcare, energy, the environment, and of our culture itself:

—Healthcare. Smarr sees healthcare moving increasingly to “a prevention and wellness model” that relies on innovations in the emerging field of “wireless health” technologies and the digital transformation of medical care. In our conversation, Smarr compares the way it will work to an automobile maintenance schedule:

“I just bought a new car, a hybrid,” Smarr says. “It has 30 computers in it. It probably has another 60 or 70 sensors, actuators, and memory chips. So my car will easily run … Next Page »

Comments (1) | Reprints | Share:          

Seattle-based Cray, the supercomputing company, announced today it has signed a multi-year contract with the Korea Meteorological Administration worth more than $40 million. Cray (NASDAQ: CRAY) will deliver a next-generation supercomputer (capable of more than 600 trillion calculations per second), as well as service and support, to the Seoul-based weather forecasting and climate research organization. Delivery and acceptance of the supercomputer are expected in 2010.

Comments | Reprints | Share:          

Seattle-based Cray (NASDAQ: CRAY), the supercomputing company, announced late last week it has acquired the PathScale Compiler Suite assets from Maynard, MA-based SiCortex. Financial details were not released. SiCortex shut down in May. The purchase could help Cray improve its own compiler technology, as well as give PathScale customers a way to move forward on Cray supercomputers.

Comments | Reprints | Share:          

In the past week, companies have been releasing their financial results for the second quarter. There’s a mix of good and bad news from Seattle’s public tech companies weathering the economic storm, with surprisingly positive news from some quarters.

—Bellevue, WA-based metasearch developer InfoSpace announced its revenue was $43.8 million for the quarter, up 14 percent from the same period last year. InfoSpace (NASDAQ: INSP) now has $208.3 million in cash and securities. This was better than analysts had expected from InfoSpace, which has undergone some significant growth recently, including a new charity search website Xconomy previously wrote about.

—Good news was also reported by Seattle-based supercomputer manufacturer Cray (NASDAQ: CRAY), which turned a profit with $62.7 million in revenue last quarter, up 34 percent from the same period last year. Cray’s success has a lot to do with recent, lucrative contracts the company has landed. Xconomy recently profiled Cray here.

—Things were less positive for Seattle-based digital media company RealNetworks (NASDAQ: RNWK), which reported $135.7 million in second-quarter revenue, an 11 percent decrease from last year. For this quarter, RealNetworks had a net loss of $188.3 million. The company said it hopes to show some improvement for the second half of the year.

—Online diamond retailer Blue Nile (NASDAQ: NILE) also reported a slight decrease in revenue. The Seattle-based company posted net sales of $69.9 million, a decrease of 5.2 percent from the same period last year, although sales are continuing to increase slightly from year-to-year for the company.

—Slightly more cheerful news was posted by embedded device software developer Bsquare (NASDAQ: BSQR). The Bellevue, WA-based company earned $16.1 million in revenue, up 5 percent from the second quarter of 2008. The company announced last month it will start working with Coca-Cola to create the Coca-Cola Freestyle software-driven fountain dispenser.

Comments | Reprints | Share:          

Seattle-based supercomputing company Cray (NASDAQ: CRAY) surprised analysts this morning by turning a modest profit in the second quarter, and was rewarded with a 12 percent bump in its stock price today.

Cray said today its revenues for the quarter ($62.7 million) increased by 34 percent compared with the same period last year ($46.7 million). That sales performance was enough to lift Cray to a profit of $3.4 million, compared with a $6.4 million loss it reported in the same period a year ago. This translated to a 10 cent per share profit in the quarter, which handily beat the consensus expectation of analysts, who forecasted a break-even quarter, according to First Call.

It has been a long road back for Cray, as I reported last week in an in-depth profile of the company. CEO Peter Ungaro told me Cray has become debt-free as of this spring (it had been saddled with $80 million of liabilities), and has been boosting its revenues through an aggressive three-pronged business strategy: selling high-end supercomputers to national laboratories, performing custom engineering and services, and selling lower-end machines to corporate customers through partnerships with companies like Microsoft and Intel. This strategy has been paying off handsomely, as the company announced several new contracts as part of its quarterly report—and this puts the company on sound enough footing to be profitable for the full year in 2009 and beyond.

Last month, Cray was awarded a multi-year contract with the Department of Energy’s National Energy Research Scientific Computing Center at Lawrence Berkeley National Laboratory. The contract, worth more than $50 million, includes the delivery of a Cray XT5 supercomputer, which will be upgraded to a future-generation Cray machine. And just this week, Cray received a contract to upgrade its “Jaguar” machine at Oak Ridge National Laboratory. Jaguar, which runs scientific applications at a rate of more than one petaflop (quadrillion mathematical calculations per second), will be upgraded to exceed two petaflops, which would make it the world’s most powerful supercomputer. The upgrade is expected to be installed by the end of this year.

“We’ve made tremendous progress on some of our new initiatives, expanding our product and service offerings to further solidify our leadership position in the industry,” Ungaro said in a statement. He added that Cray is delivering its supercomputing technology to a “broader set of customers,” and cited “over $70 million in new wins in just the last week.”

Cray has about 850 employees, 160 in the Seattle office. The company also has large facilities in Minnesota and Wisconsin, its original birthplace. (Cray Research was founded in 1972 by the renowned engineer Seymour Cray.) Its main competitors in supercomputing include IBM, Hewlett-Packard, Silicon Graphics, Hitachi, and NEC.

Comments | Reprints | Share:          

Where I grew up in the Midwest in the 1970s and early 80s, Cray was synonymous with supercomputing. Back then, a supercomputer was a top-flight machine that could perform a few hundred million floating point operations per second (“flops”). That was good enough to help scientists do intensive calculations in areas like weather forecasting, climate modeling, and nuclear weapons simulations. Cray’s first supercomputer, the famed Cray-1, was bought by Los Alamos National Laboratory for $8.8 million in 1976; eventually, some 80 of the machines were sold, for $5 million to $8 million a pop.

Today, your average desktop computer is far more powerful than a Cray-1, and so the definition of “supercomputer” keeps changing to keep up with the times. But one thing has not changed. Cray (NASDAQ: CRAY) is still a major player in the space, despite a long history of ups and downs. The company, which began in 1972 as Cray Research in Chippewa Falls, WI, was bought by Silicon Graphics in 1996 for $767 million, and then was reborn in Seattle in 2000 following a $50 million merger with Tera Computer (which was renamed Cray). Since then, it has been a long uphill climb to get back near the top of the supercomputing heap against heavyweight competitors like IBM and Hewlett-Packard.

Nobody better to tell that story than Peter Ungaro, the chief executive of Cray. I recently had a chance to speak with Ungaro by phone at his Spokane, WA, office about his company’s strategy and recent history, the technical challenges involved in modern supercomputing, and innovative ways of gaining new customers (how do you sell someone a $10 million machine?). What impressed me was his ability to lay out the financial concerns of his company while also diving deep into the technological aspects of supercomputers—how they will interact with cloud computing, how computational records will continue to be broken, and when computers might exceed all processing capabilities of the human brain.

First off, I wanted to know how Ungaro (left) defines a “supercomputer” these days. Some would say it should be one of the 500 fastest machines in the world. Others would say it’s a machine used for scientific and technical problems that costs more than a certain amount. Ungaro’s definition is simple and focuses on the bottom line. “We like to think of supercomputers as costing more than a million dollars,” he says.

Ungaro, a Washington State University alum, joined Cray in 2003 to run sales and marketing as senior vice president. He had been at IBM for 13 years, most recently running its high performance computing group, a $2 billion business inside Big Blue. Why did he make the jump to Cray? “I really loved the supercomputing space,” Ungaro says. “Customers are doing really interesting things. I really wanted to try and see what a smaller company was like. Even at $2 billion, you’re only 2 percent of IBM’s revenues.” In short, like many entrepreneurs, he wanted to have more impact. “There was no better place to go than Cray. It was a natural move.”

But Cray had its share of problems. The company had struggled to get its next-generation supercomputer product ready, and 2004 was “really rough,” Ungaro says. Cray was losing money and … Next Page »

Comments (4) | Reprints | Share:          

Civic leaders, economic visionaries, and passionate residents often claim that their city is the next to rebound. I say with confidence that my city is next in line for metamorphosis. Some find their new meaning through the arts and other organic movements, but in most recent accounts, it seems, a few deserving cities are staged for a comeback with the help of high-tech industry. Holyoke, Massachusetts, is one of these cities.

Last week, it was announced that the Massachusetts Institute of Technology, University of Massachusetts, and Boston University would be collaborating with Fortune 500 technology giants Cisco Systems and EMC and the Commonwealth of Massachusetts to build a high-performance computing center (HPCC) in the city of Holyoke.

I got involved in the early stages of this effort back in October of 2008, when I was invited to a Technology Roundtable at MIT. It was surreal finding myself, a young web entrepreneur, talking with and having breakfast at the same table as Governor Patrick, MIT president Dr. Susan Hockfield, Cisco’s John Chambers, and various other leaders and innovators in the world of business and technology. Major topics included the future of the tech industry in Massachusetts, its impact on the state economy, and support of entrepreneurship. When the conversation moved in my direction, I was encouraged to share my thoughts and suggest various underutilized opportunities I saw as a young entrepreneur living and working in the western part of the state. I made what I hoped were persuasive statements for my city, advocating that it would be the premier location for sustainable, cost-effective, large-scale data centers. By the look on everyone’s faces, it was clear that Holyoke had been on their radar for such a project.

Western Massachusetts has many valuable resources that would make it an appealing and economically advantageous destination for the tech industry. But what firmly stands out in this region is the small city of Holyoke and its abundance of power—specifically, cheap, renewable hydro-electric power. The city receives approximately three-quarters of its energy from its hydro-electric sources, which include an expansive dam and turbines located along canals powered by water diverted from the Connecticut River. The municipality-owned utility company also announced recently that it would be acquiring hundreds of acres of land on a nearby mountain range to develop a high-capacity wind farm. In regards to technology, Holyoke already has an extensive high-speed fiber optic network throughout its downtown and is located along the Mass Information Turnpike backbone.

It is likely that Holyoke’s new computing and data center will be modeled after Google’s “Project 02″ in The Dalles, OR, and its data-center in Baudour, Belgium. Water from the river or industrial canals will be used to cool the servers and ensure that the hardware runs efficiently.

When it was founded in the mid-19th century, Holyoke was one of the first cities planned for industry—and it promoted its plentiful supply of inexpensive energy and labor to lure manufacturing businesses and investors. It became the center of the global paper industry and spurred tremendous amounts of wealth, laying claim to being the richest city per-capita in the United States by the 1920s. At the city’s prime, Holyoke’s cultural offerings were compared to those of New York City and Paris. After the Great Depression and general de-industrialization that struck the Northeast, Holyoke slowly began to lose its prosperity, businesses, jobs, population, and reputation. For as long as I can remember in my 21 years of existence, the city has been in rough shape. People often blame the city’s reputation as what’s repelling business—but real innovators, entrepreneurs, and “urbanists” see past that image and recognize this diamond in the rough. The raw, undisputed assets stare you straight in the face—and, finally, the right people are staring back. This new computing collaboration will be an anchor, attracting entrepreneurs and young minds eager for involvement in something of great magnitude.

As this high-profile project moves forward, I’d expect many eyes from the technology sector to be fixated on Holyoke. There is still over two-million square feet of vacant building space, consisting mostly of red-brick factory structures ready to be reclaimed by the high-tech community at bargain prices. Is there a chance that a company like Google might look at Holyoke for its next data-center in the Northeast? I believe it’s very likely.

I’m optimistic about what the future holds for the city of Holyoke. High tech offers the much-needed flow of capital, job creation, and stimulus that post-industrial cities like Holyoke desperately thirst for. With the escalating focus on green industry, sustainability, and long-term cost factors, Holyoke is a premier location for the Northeast IT sector. The beloved Queen of Industrial Cities as it was called at turn of the century, fell off her throne many decades ago, but is now back with a new purpose. Thanks to the forward-thinking powers at hand, Holyoke will be given a new identity as a coveted destination for high tech.

Comments (7) | Reprints | Share: