SGI/Rackable Walks away from a PFLOP deal. No, this is actually good news.
I was half way through this weeks column when I noticed Rumor SGI Terminates PFLOPS Deal and then I read The Business Side of HPC on Joe Landman’s blog. I need to chime in on this story.
In case you did not read about it, I’ll summarize the reported rumor. If you recall, old SGI is gone. Rackable systems bought some of the assets, but as a legal entity SGI is history. While it was alive, however, it signed a deal with the National Science Foundation and the Pittsburgh Supercomputer Center to deliver a 1 PFLOPS (1×10^15 Floating Point Operations per Second) system for $30 million. The new SGI/Rackable is under no obligation to honor the deal and it is rumored that they have decided to walk away.
Most people may find this incredibly hard to believe, but there is one big reason you walk away from a deal — if you will lose money. And, if you do some math, you will find that price works out to $33 per GFLOP. As someone who specializes in cheapskate supercomputing, that is a too good to be true deal — kind of like finding a gas station selling gas at $1/gallon. Of course, you have to wonder how long that gas station or computer company would stay in business. Oh wait, old SGI is out of business.
One also must ask, why sell so cheap? The answer takes a little explaining, but basically, there is a lot of “buying business” at the high end of the HPC market. I like to call it “buying a press release”, but the idea is the same. In addition, there is what I call a tradition of “give us a gift” mentality at many educational and government institutions.
In the past, I have personally seen RFPs for systems that were asking for “below market pricing.” It was an obvious ploy to see if they could get a company or two to give them a cluster in return for all the HPC good will they capble of producing. The vendor gets prestige, placement on the Top500, and of course copious press releases. In a way, I can’t blame the institutions for trying this. After all, if all the vendors say “No thanks” then they have to rework their RFP and live with the fact that they were not as important as they thought. In addition, in years past when margins on big iron supercomputers were large, many non-commercial institutions were used to seeing huge discounts from the vendors who, by the way, still made money.
For those institutions that still want to play “squeeze the vendor for a gift”, I have this to say. Be careful. You are playing a rather poor end game. Going back to our gas station analogy, if everyone goes for the $1/gallon station, then very soon the other gas stations go out of business, then when the “gas gift” comes to an end because no one can loose money forever, leaving you with no gas. I have offered a similar invitation last year when I went on a rant about cluster vendors. There are vendors who really help move the market and community forward and then there are those who want to sell you cheap hardware. The vendors you choose will have a big impact on the future of this market. And, for those who want to spout off “let the market decide” tripe, remember HPC is specialized niche. If you squash all the good companies who provide good products and services, which usually cost more, in favor of cheap hardware, you may find yourself wanting in few years.
On the other side of fence are the vendors who believe that “buying business” is a good idea. I suppose that it is a kind of loss leader mentality. If we get this system in, then we can sell them more at a higher prices. Or perhaps, it is that placement on the Top500 list that interests you. Guess what, I have a little secret, inside the cases, it is pretty much all the same stuff. If you want to differentiate, add value, not discounts. Oh and those Top500 press releases, everybody has them now. No big deal.
In closing, I would like to congratulate, SGI/Rackable CEO Mark Barrenechea for “just saying No”, if the rumor is true. I hope others follow his lead. As for PSC and the NSF, look, I will still love you if you have less than 1 PFLOP. After all, there is still work to be done.