HP Enterprise Acquires Cray, Supercomputer as a Service Push Coming

HP Enterprise is acquiring Cray Inc. to counter IBM in the supercomputer market. The $1.3 billion deal was confirmed this morning.

Cray, founded in 1972 by famed electrical engineer Seymour Cray, has a legendary reputation in the supercomputer market — where several of the company’s systems rank among the world’s Top 500 most powerful non-distributed computer systems.

But much like mainframe computers, Cray hasn’t exactly enjoyed a booming business amid the worldwide shift toward cloud computing and everything as a service.

For its first quarter of 2019, ended March 31:

  • Revenue was $72 million, down from $80 million in the first quarter of 2018.
  • Net loss was $29 million, compared to a $25 million net loss in the first quarter of 2018.

The company’s market value was roughly $1.2 billion the day before the deal was announced.

HPE Acquires Cray Supercomputer: Reasoning

Explaining the deal, HPE CEO Antonio Neri said:

“Answers to some of society’s most pressing challenges are buried in massive amounts of data. Only by processing and analyzing this data will we be able to unlock the answers to critical challenges across medicine, climate change, space and more. Cray is a global technology leader in supercomputing and shares our deep commitment to innovation. By combining our world-class teams and technology, we will have the opportunity to drive the next generation of high performance computing and play an important part in advancing the way people live and work.”

Added Peter Ungaro, president and CEO of Cray:

“This is an amazing opportunity to bring together Cray’s leading-edge technology and HPE’s wide reach and deep product portfolio, providing customers of all sizes with integrated solutions and unique supercomputing technology to address the full spectrum of their data-intensive needs. HPE and Cray share a commitment to customer-centric innovation and a vision to create the global leader for the future of high performance computing and AI. On behalf of the Cray Board of Directors, we are pleased to have reached an agreement that we believe maximizes value and are excited for the opportunities that this unique combination will create for both our employees and our customers.”

HPE Acquires Cray Supercomputer: Potential Opportunities

Despite Cray’s mixed financial picture, the company’s technology apparently intrigues HPE for several reasons. Potential synergies with HPE include, according to ChannelE2E:

  • Government contracts: Cray has deep relationships with multiple U.S. federal agencies along with governments worldwide.
  • Privacy and Security: Even as more workloads shift to public cloud systems, some highly sensitive government and corporate applications. The company in March 2019 hired John Dinning as SVP of products for that commercial push.
  • Analytics and Artificial Intelligence: Even as AI technology goes mainstream via Amazon Web Services, Microsoft Azure, Alexa and other as-a-service options, Cray’s supercomputer systems may give government organizations a leg up in their own AI research.
  • Supercomputing as a Service: Cray has been extending its supercomputer know-how to public clouds such as Microsoft Azure.

For its part, HPE points to these specific synergies with Cray:

  • Future HPC-as-a-Service and AI / ML analytics through HPE GreenLake
  • A comprehensive end-to-end portfolio of HPC infrastructure – compute, high-performance storage, system interconnects, software and services supplementing existing HPE capabilities to address the full spectrum of customers’ data-intensive needs
  • Differentiated next-generation technology addressing data intensive workloads
  • Increased innovation and technological leadership from leveraging greater scale, combined talent and expanded technology capabilities
  • Enhanced supply chain capabilities leveraging US-based manufacturing

Cray also has a highly specialized partner ecosystem — featuring such well-known names as Atos and World Wide Technology, among many others.

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