SGI Taps HPC Veteran for New CEO

Published: April 10, 2007

by Timothy Prickett Morgan

Supercomputer maker Silicon Graphics, which came out of bankruptcy protection last October, has decided to hire a new chief executive officer to try to get it on the path to revenue growth and profits again. Bo Ewald, who was formerly the chairman and CEO at Linux Networx, a rival Linux supercomputer maker, has been picked to take over for Dennis McKenna, who was named CEO in a management shakeup in January 2006.

A decade ago, for less than a year's time, Ewald was actually the executive vice president and chief operating officer at SGI, so he is returning to his roots. Prior to working for SGI, Ewald was in charge of the computing and communications division of Los Alamos National Laboratory, one of the half dozen supercomputer centers funded by the United States government to push the envelope on supercomputing technologies.

Ewald left SGI about 10 months after Rick Belluzzo was hired away from Hewlett-Packard's computer division to be the CEO that was going to transform SGI into the supercomputer vendor for the 21st century. It was Belluzzo's plan to get SGI into the Windows-X86 workstation business and move away from general purpose systems down to technical computers and clusters that played to SGI's strengths; he also moved SGI to the Itanium platform. A year later, in August 1999, Belluzzo spun out Cray, a rival it was strong enough to acquire in 1996 and which has in many ways done better away from SGI than it did inside of it. (Not that Cray has had an easy time of it, mind you, in a high-performance computing market dominated by clusters of cheap X86 and X64 servers running Linux.) That August reorganization also saw SGI put its effort behind Linux and Itanium, resulting in the Altix product line that represents the bulk of SGI's sales today.

Since leaving SGI, Ewald has held a variety of positions at an interesting mix of companies. From July 2003 to January 2005, Ewald was executive vice president of human resources solutions at Ceridian, a service provider that delivers HR applications to some 110,000 customers worldwide; he has been a director on the board of Ceridian since March 2001. From October 2002 to July 2003, Ewald was chairman and CEO at Scale Eight, an HPC cluster startup, and from March 1999 through September 2001, he was president and CEO at E-Stamp, a company providing Web-based postage stamps. Ewald is being given a $600,000 base salary per year, plus a cash bonus for SGI's fiscal 2008 that can be as high as his salary if he meets certain objectives (which SGI did not specify in its 8K filing with the Securities and Exchange Commission). In fiscal 2007, he gets the bonus no matter what, prorated for the number of days he works. Ewald also gets $75,000 in relocation expenses and options on hundreds of thousands of SGI shares as part of his compensation package.

McKenna oversaw SGI's restructuring last year, brought the company out of bankruptcy in early October, and then launched a lawsuit against ATI Technologies, which had just been acquired for $5.4 billion by chip maker Advanced Micro Devices. That lawsuit contends that ATI has violated graphics processing patents held by SGI, which was an innovator in the Unix graphics workstation business a decade ago. That, more than anything, is what put SGI on the map in the HPC world. McKenna took a lump sum payment of $500,000 to leave SGI.

Linux Networx had actually hired Jack Kenney, chairman and CEO of Everex Systems, a niche PC marker based in Fremont, California, to be its new CEO a few days before Ewald left for SGI. Kenney has 25 years in the IT industry, and has had management positions at Digital, Honeywell, Scientific Micro Systems, and Memorex. Linux Networx completed its third round of venture capital financing for $37 million last September, and has carved out a niche for itself in the Opteron-based Linux cluster market by focusing on services and configuring machines for optimal performance on very precise HPC workloads. The company has sold more than 500 Linux clusters to over 200 customers, and has grown revenue for the past five quarters on a sequential basis. That is a pretty tough business to walk away from, but it looks like SGI made Ewald a deal he could not refuse.

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