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Cray Research, Inc.

Cray Research, Inc.

655A Lone Oak Drive
Eagan, Minnesota 55121
U.S.A.
(612) 683-7100
Fax: (612) 683-7198

Wholly Owned Subsidiary of Silicon Graphics, Inc.
Incorporated:
1972
Employees: 4,840
Sales: $676.24 million (1995)
SICs: 3571 Electronic Computers

Cray Research, Inc. is the worlds premier producer of supercomputershigh-performance computer systems that can handle a large number of calculations in a very brief time. Through an aggressive new product development program, Cray introduced in the mid-1990s a full range of systems from low to high end. The last of the independent supercomputing firms, Cray accepted a takeover offer from Silicon Graphics, Inc. in early 1996.

Early History

Cray Research was formed through the efforts of Seymour Cray, a recognized genius in the design of supercomputers. Cray was born in 1925 in Chippewa Falls, Wisconsin, and spent a boyhood devoted to tinkering with electronic gear. After service in World War II working as a radio operator and then functioning as a specialist in breaking Japanese codes, he attended the University of Minnesota, earning a bachelor of science degree in electrical engineering and another in applied mathematics, both in 1950. He decided to enter the computer industry and took a job with Engineering Research Associates, founded by William C. Norris. Through a series of mergers, Engineering Research Associates was brought under the control of Sperry Rand Corporation. Norris left Engineering Research Associates and established Control Data Corporation in 1957. Cray soon followed him to the new company. Among his early projects at Control Data, Cray developed the 1604, one of the first computers to use transistors in place of vacuum tubes.

Control Data shared in the booming computer industry of the 1960s, experiencing a period of rapid growth. Cray became disenchanted with the bureaucracy that this growth created and insisted that the company build him a separate research facility in his home town of Chippewa Falls. In this new facility, he came up with the CDC 6600, the first commercial computer capable of handling three million program instructions per second. Crays special talent was in putting the circuits of a computer very close together, reducing the time taken for electric signals to pass between them. This closeness, however, increased the heat generated by the circuits. Cray was able to introduce innovative ways of removing this heat.

Crays success at Control Data eventually hit a stumbling block. In 1972, top management at the corporation halted his plans for a new computer, telling him he could continue working on it only after another computer project was completed.

Instead of waiting, Cray and a group of followers left Control Data to set up Cray Research. Their purpose in starting the new company was to design the first supercomputer, which they ultimately named the CRAY-1. Cray Research was initially situated in Crays laboratory in Chippewa Falls. After several years of work on the supercomputer project, in March 1976, the company delivered its first computer to the National Center for Atmospheric Research. This sale enabled it to earn back its original investment.

The CRAY-1 was the fastest computer then available. It used the technique of vector processing, which employs a system wherein a series of operations are manipulated at once as opposed to scalar processing where operations take place one at a time. The CRAY-1 could execute 32 operations simultaneously, making it able to complete ten times the work of some larger systems. While it was delivering its first sale, the company also made its first public offering of stock. The company complemented its supercomputers with software programs, releasing its Cray Operating System (COS) and Cray Fortran Compiler in 1977.

During its early years of operation, Cray Research sold its supercomputers to government laboratories and agencies. The main application of supercomputers was in physical simulation, wherein computer models were used to analyze and forecast the response pattern likely to take place in a system composed of physical variables. Early applications of these models were in gauging the effects of nuclear weapons and in meteorology. Since these types of applications were performed under the aegis of the government, it was felt that the market for supercomputers would be very limited. In 1978, however, Cray Research was given its first order from a commercial organization.

Second Generation SystemsEarly 1980s

The CRAY-1 system became the CRAY-l/S and the CRAY-l/M systems. As the 1980s began, the company decided to begin development of the next generation of supercomputers. To concentrate his efforts on that development, Seymour Cray resigned as CEO in 1980, and in 1981 he stepped down as chairman. John Rollwagen became CEO in 1980 and chairman in 1981. Cray retained his ties with the company as an independent contractor and as a member of the board of directors. The new project called for the design and development of the CRAY-2, intended to be the first computer on the market that used chips made of gallium arsenide. When the gallium arsenide chips were not available, Cray returned to silicon. The CRAY-2 system was completed in 1985, achieving a performance level ten times that of the CRAY-1.

Because the CRAY-2 project contained an element of risk due to its innovative technology, Rollwagen had the company initiate a second project based on a further upgrade of the CRAY-1 technology. Under the direction of Steve S. Chen, the CRAY X-MP system was devised. This system marked the first use of multiprocessors, where a number of microprocessors are linked together to take on bigger jobs. Introduced in 1982, the CRAY X-MP was originally a dual processor, with a speed three times that of the CRAY-1.

As had been done with the CRAY-1, both the CRAY-2 and the CRAY X-MP supercomputers evolved into more sophisticated systems. The CRAY X-MP served as the basis for a series that consisted of 11 models. The more innovative CRAY-2 design had three-dimensional circuit interconnections linking circuit boards within a module. Software enhancements were also made available, with the 1986 introduction of a new operating system, UNICOS, which combined the COS system with the AT&T UNIX System V. This advance was especially important because UNIX was well established as the industry standard, especially in areas of scientific application, where supercomputing has been so useful; meanwhile an advanced Cray Fortran Compiler, named CF77, was also made available.

Third Generation SystemsLate 1980s

By the mid-1980s Cray Research embarked on producing another generation of supercomputers, again following several paths. In 1986, Chen began working on a new system of highly innovative design, relying on significant technological advances in five different areas. After spending nearly $50 million on the project, the company decided to discontinue it. Chen left the company in 1987, taking 45 engineers from Cray Research, to form Supercomputer Systems, Inc., with plans to build a supercomputer using as many as 256 microprocessors.

Seymour Cray completed design work on the CRAY-3 supercomputer system in 1987. The CRAY-3 marked another effort to use gallium arsenide chips, a prospect made more feasible by the production of the first of the new type of chips suitable for computer production in the 1980s. While awaiting the CRAY-3, the company developed and introduced the CRAY Y-MP system, which combined the power of eight central processing units to give it 30 times the power of the original CRAY-1.

Cray Research passed two important milestones in 1987. First, it delivered its 200th computer system, especially noteworthy since it had taken from 1976 to 1985 to reach a total of 100 computer shipments. This rapid expansion made possible the second milestone, the inclusion of Cray Research among the nations largest companies, listed in the Fortune 500. This period of rapid expansion was possible because the company was able to market its supercomputer systems to commercial corporations engaged in petroleum exploration, automobile production, and the aerospace industry.

Cray Research underwent a major restructuring in 1989. Delays in the development of the CRAY-3 system were creating very high research costs, and the scheduled date for completing the project was reportedly postponed. In addition, the company had embarked on another project, the C-90, as a new stage in the CRAY Y-MP product line. Rather than discontinue one of the projects, Rollwagen decided to create a new company, Cray Computer Corporation, to be headed by Seymour Cray. Located in Colorado Springs, Colorado, Cray Computer would continue the development of the CRAY-3 supercomputer. On November 15, 1989, Cray Research issued shares of Cray Computer to its stockholders, retaining a 10 percent ownership in the new company (which it later sold). Seymour Cray resigned from the board of directors of Cray Research, severing formal connections with the company he had formed, although he remained a stockholder.

Even after this spinoff Cray Research retained a solid position as the leading company in the production of supercomputers, with about two-thirds of the world market. In 1989, it phased out the CRAY-2 and CRAY X-MP as new models of the CRAY Y-MP were coming on line. There were continuing plans for development of the C-90 project, which was renamed the CRAY Y-MP/16. The company also began development of enhanced systems for supercomputer networking to facilitate scientists access to Cray supercomputers from a variety of other types and brands of computers. In addition, there were plans to bring to the market an entry-level supercomputer, which would use the technology of the CRAY Y-MP, but would have a much lower price with reduced installation and operating costs.

As the market for supercomputers expanded, Cray Research diversified its sales efforts both in terms of type of customers and geographic region. In 1989 governments remained the largest customers, buying 31 percent of Cray Researchs output; other important purchasers of Cray machines included universities, aerospace, petroleum, and automotive companies, energy producers, and weather and environment analysts. Sales in North America that year were 61 percent of the total. Approximately 75 percent of revenue between 1987 and 1989 was derived from sales of computer systems, with remaining income from leased systems and service fees.

Cray Research also took measures to provide for better distribution of its products. It entered into an arrangement with Control Data to make Cray supercomputers available to Control Datas customers, using Cray products to replace Control Datas line of supercomputers that was discontinued in 1989. Marcelo Gumucio, who directed Cray Researchs marketing operation, was named president and chief operating officer in 1988. By placing more emphasis on the marketing of its products, with less attention paid to product development, Cray Research anticipated that it would be better able to meet the challenges of international competition in the supercomputer industry.

1990s and Beyond

The early 1990s were a shakedown period in the industry, particularly for independent firms in the United States, and for a time Cray itself seemed very vulnerable. Increasing competition from Japanese computer giantsFujitsu, Hitachi, and NEC and from U.S. giant Intel had by 1990 already cut Crays market share to about 65 percent; this compared to the 80 percent level for the number of installed supercomputers that were Cray models. Looming on the horizon were several upstart companies seeking to build less-expensive but still very powerful modelssuch companies as Alliant, Convex Computer, Kendall Square Research, nCube, Supercomputer Systems, and Thinking Machinesor create high-end models such as Seymour Crays Cray Computer. At the same time, Cray Research faced the decline of its core marketgovernment agencies and laboratories, the military, and government-supported entities such as universities and research centerswith the end of the Cold War and cutbacks or slowdowns in government spending worldwide.

Facing these threats, Rollwagen reportedly realized in 1990 that he had put the wrong man in charge in the person of Gumucio. Just when Cray needed more than ever to tap into its engineers expertise, Gumucios formal management stylehe increased reports and procedures required of employees for the purpose of setting specific goalsstifled their creativity and dampened morale. The more inspiring figure of Rollwagen resumed operating responsibilities.

At the end of 1990, Crays install base stood at 262 systems in 20 countries. With little chance to expand within its core governmental market, Rollwagen knew that future growth would have to come from the commercial sector, notably the aerospace, automotive, financial, health care, and telecommunications industries; and that, in order to penetrate these new markets, Cray itself would have to start offering lower-priced models.

Initially, Cray moved into the low-end supercomputer market through acquisitions. In early 1990 it made its first move by acquiring Supertek Computers, Inc., a troubled California-based maker of Cray-compatible minisupercomputers general-purpose scientific computers that are not as powerful as standard supercomputers. Since minisupercomputers sold for as little as $250,000, Cray viewed them in part as an entry level for new customers who might later be tempted to invest in a multimillion-dollar supercomputer. Also on the low end was the 1991 purchase of superserverhigh-end servers within a client-server environmentassets of the bankrupt Floating Point Systems, which became Cray Research Superservers, Inc. The following year this new subsidiary introduced its first product, the Cray S-MP, which was designed for the widely used Sun Microsystems SPARC processor client-server environment.

Meanwhile, Crays newly energized product development program produced results on both the low and high end. Within one month in late 1991, Cray introduced an entry-level system priced at about $340,000 called the Y-MP EL and its fastest vector supercomputer to date, the C90, with operational speed four times that of its previous fastest model. Cray had also begun work on a new type of supercomputer (at least for Cray), a massively parallel processing (MPP) system. Long touted by some analysts as the inevitable successor to the vector systems pioneered by Cray, MPP systems linked a number of standard microprocessors to create a virtual supercomputer at a potentially much lower cost than vector systems. MPP systems were the type that the upstart supercomputer companies were developing.

In 1992, even though its entry-level system resulted in 70 new customers and exceeded the companys sales projections, Cray posted a net loss of $14.86 million. Its new products and acquisitions not yet paying off in full, the firm had to take a $42.8 million restructuring charge late in the year to cut costs it closed one plant and eliminated 650 jobs, or one-eighth of the work force.

Early in 1993, Rollwagen resigned to join the Clinton administration and was replaced by John F. Carlson, a 16-year Cray veteran. Later that year, Crays first MPP system was rolled out, the T3D. Although scoffed at by rivals because it had to be linked to a standard Cray vector system, the T3D outperformed other MPP systems and helped put a number of the upstart firms out of business (such as Thinking Machines and Kendall Square Research) or into the arms of larger firms (such as Convex Computer which was acquired by Hewlett-Packard in 1995).

Although Cray returned to profitability in 1993, additional restructuring was needed to improve the companys operations. In 1994, which saw the resignation of Carlson, an $8.3 million charge was incurred, while in 1995, when former vice-chairman of Eastman Kodak and former president of Sun Microsystems J. Phillip Samper became chairman, $187.7 million in charges were booked. The 1995 charges contributed to a full-year loss of $226.4 million, but were incurred within a critical year in which three major new products were introduced: a new low-end J90 series; a new high-end vector system, the T90 series (touted as the first wireless supercomputer and five times faster than its predecessor, the C90 series); and Crays second-generation MPP system, the T3E. The last of these, unlike its predecessor, did not need to be connected to a traditional vector supercomputer and had a top theoretical speed of one teraflops (one trillion operations per second), a long-sought-after speed level. On the basis of these introductions, Cray built up by year-end 1995 a $437-million order backlog. Even without having filled the backlogged orders, Cray could still boast of having increased its installed base to 758 systems in 37 countries (nearly three times the level of 1990).

By early 1996, Cray Research was the only independent supercomputing firm left. Among the victims was Cray Computer, which declared bankruptcy early in 1995. Cray Research had survived and now had a range of products to offer from lower-end superservers and minisupercomputers to entry-level supercomputers to high-end vector and MPP supercomputer systems. But it now competed directly with several firms with much deeper pocketsthe Japanese computer giants and Intel on the high end and Hewlett-Packard, IBM, Sun Microsystems, and Silicon Graphics, Inc. (SGI) on the lower workstation end. So when SGI, a leader in high-powered workstations with a particular emphasis on graphics-oriented systems, made a friendly takeover offer early in 1996, Samper and other Cray executives decided to accept the offer rather than attempt to continue to compete against such giants. The $739.2 million deal bolstered SGIs position in the technical-computing arena and simultaneously ended the era of independent supercomputer companies.

Although no longer independent, Cray Research had survived the early 1990s and could now tap into SGIs deep pockets to develop future systems. It would have to do so without Samper, who resigned shortly after the takeover and who had been credited with turning Cray around in his brief tenure to the point that it was desired by SGI. Robert H. Ewald was to continue as Crays president and CEO and handle day-to-day operations.

Principal Subsidiaries

Cray Research France S.A.; Cray Research GmbH (Germany); Cray Research Japan, Ltd.; Cray Research Superservers, Inc.; Cray Research (UK) Ltd.

Further Reading

Basil, Richard, The Origin of PCs (and Descent of Cray), PC Magazine, May 15, 1984, p. 128.

Bulkeley, William M., Pact to Buy Cray Marks End of an Era of Independent Supercomputing Firms, Wall Street Journal, February 27, 1996, p. B9.

Churbuck, David, Cray Versus Japan Inc., Forbes, September 4, 1989, pp. 118-19.

Cook, James, War Games, Forbes, September 12, 1983, p. 108.

Donlan, Thomas G., Not So Super Outlook: For Cray Research, Competition Looms, Barrons, February 5, 1990, p. 39.

Finley, Michael, Crays New Way, PC Week, September 18, 1995, p. A5.

Johnson, Jan, A Look Inside Cray, Datamation, May 1982, p. 57.

Jurassic Pact, Economist, March 2, 1996, pp. 58-59.

Megaflopolis: Supercomputers, Economist, November 28, 1992, p. 79.

Mitchell, Russell, Can Cray Reprogram Itself for Creativity?, Business Week, August 20, 1990, p. 86.

, The Genius: Meet Seymour Cray, Father of the Supercomputer, Business Week, April 30, 1990.

, Now Cray Faces Life Without Cray, Business Week, May 29, 1989, p. 31.

, What? Cray Computers Eating Dust?, Business Week, November 25, 1991, p. 88.

Mitchell, Russell, and Gary McWilliams, Cray Eats Crow, Business Week, October 4, 1993, p. 108.

Murray, Charles J., The Ultimate Team Player: Lester T. Davis, Winner of the Design News Special Achiever Award, Supplied the Technical Vision That Helped Cray Research Dominate the Supercomputer Industry, Design News, March 6, 1995, pp. 88-95.

Murray, Chuck, Changing Customers Fuel Supercomputing Shifts, Chicago Tribune, December 18, 1994.

Perilous Descent: Cray and Supercomputers, Economist, April 21, 1990, pp. 81-82.

The Race Is Not Always to the Gigafloppiest, Economist, April 15, 1989.

Rigdon, Joan E., and William M. Bulkeley, Silicon Graphics Inc. Agrees to Acquire Cray Research in $739.2 Million Deal, Wall Street Journal, February 27, 1996, pp. A3, A4.

Schatz, Willie, Whos Winning the Supercomputer Race?, Datamation, July 15, 1989.

Stedman, Craig, Cray Fights for New Users, Computerworld, March 6, 1995.

Donald R. Stabile

updated by David E. Salamie

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Cray Research, Inc.

Cray Research, Inc.

655A Lone Oak Drive
Eagan, Minnesota 55121
U.S.A.
(612) 683-3800
Fax: (612) 683-3899

Public Company
Incorporated: 1972
Employees: 4,700
Sales: $574.67 million
Stock Exchange: New York

Cray Research is the premier producer of supercomputers, providing both the machines and the software programs to operate them. Supercomputers are high-performance computer systems that can handle a large number of calculations in a very brief time. From its beginning, Cray Research has been engaged in all phases of supercomputer production, including design, development, manufacture, and marketing, and has geared its efforts toward the high-priced end of the computer market. It has been the world leader in sales of supercomputer systems, which are now in their third generation of development. A spin-off of part of its research-and-development operation into a separate company, Cray Computer Corporation, was completed in 1989.

Cray Research was formed through the efforts of Seymour Cray, a recognized genius in the design of supercomputers. Cray was born in 1925 in Chippewa Falls, Wisconsin, and spent a boyhood devoted to tinkering with electronic gear. After service in World War II working as a radio operator and then functioning as a specialist in breaking Japanese codes, he attended the University of Minnesota, earning a bachelor of science degree in electrical engineering and another in applied mathematics, both in 1950. He decided to enter the computer industry and took a job with Engineering Research Associates, founded by William C. Norris. Through a series of mergers, Engineering Research Associates was brought under the control of Sperry Rand Corporation. Norris left Engineering Research Associates and established Control Data Corporation in 1957. Cray soon followed him to the new company. Among his early projects at Control Data, Cray developed the 1604, one of the first computers to use transistors in place of vacuum tubes.

Control Data shared in the booming computer industry of the 1960s, experiencing a period of rapid growth. Cray became disenchanted with the bureaucracy that this growth created and insisted that the company build him a separate research facility in his home town of Chippewa Falls. In this new facility, he came up with the CDC 6600, the first commercial computer capable of handling three million program instructions per second. Crays special talent was in putting the circuits of a computer very close together, reducing the time taken for electric signals to pass between them. This closeness, however, increased the heat generated by the circuits. Cray was able to introduce innovative ways of removing this heat.

Crays success at Control Data eventually hit a stumbling block. In 1972, top management at the corporation halted his plans for a new computer, telling him he could continue working on it only after another computer project was completed.

Instead of waiting, Cray and a group of followers left Control Data to set up Cray Research. Their purpose in starting the new company was to design the first supercomputer, which they ultimately named the CRAY-1. Cray Research was initially situated in Crays laboratory in Chippewa Falls. After several years of work on the supercomputer project, in March 1976, the company delivered its first computer to a customer, the National Center for Atmosopheric Research. This sale enabled it to earn back its original investment.

The CRAY-1 was the fastest computer then available and used the technique of vector processing. Vector processing employs a system wherein a series of operations are manipulated as opposed to scalar processing, which processes one operation at a time. The CRAY-1 could execute 32 operations simultaneously, making it able to complete ten times the work of some larger systems. While it was delivering its first sale, the company also made its first public offering of stock. The company complemented its supercomputers with software programs, releasing its Cray Operating System (COS) and Cray Fortran Compiler in 1977.

During its early years of operation, Cray Research sold its supercomputers to government laboratories and agencies. The main application of supercomputers is in physical simulation, wherein computer models are used to analyze and forecast the response pattern likely to take place in a system composed of physical variables. Early applications of these models were in gauging the effects of nuclear weapons and in meteorology. Since these types of applications were performed under the aegis of the government, it was felt that the market for supercomputers would be very limited. In 1978, however, Cray Research was given its first order from a commercial organization.

The CRAY-1 system became the CRAY-l/S and the CRAY-1/M systems. As the 1980s began, the company decided to begin development of the next generation of supercomputers. To concentrate his efforts on that development, Seymour Cray resigned as CEO in 1980, and in 1981 he stepped down as chairman. John Rollwagen became CEO in 1980 and chairman in 1981. Cray retained his ties with the company as an independent contractor and as a member of the board of directors. The new project called for the design and development of the CRAY-2, intended to be the first computer on the market that used chips made of gallium arsenide. When the gallium arsenide chips were not available, Cray returned to silicon. The CRAY-2 system was completed in 1985, achieving a performance level ten times that of the CRAY-1.

Because the CRAY-2 project contained an element of risk due to its innovative technology, Rollwagen had the company initiate a second project based on a further upgrade of the CRAY-1 technology. Under the direction of Steve S. Chen, the CRAY X-MP system was devised. This system marked the first use of multiprocessors, where a number of microprocessors are linked together to take on bigger jobs. Introduced in 1982, the CRAY X-MP was originally a dual processor, with a speed three times that of the CRAY-1.

As had been done with the CRAY-1, both the CRAY-2 and the Cray X-MP supercomputers evolved into more sophisticated systems. The CRAY X-MP served as the basis for a series that consisted of 11 models. The more innovative CRAY-2 design had three-dimensional circuit interconnections linking circuit boards within a module. Software enhancements were also made available, with the 1986 introduction of a new operating system, UNICOS, which combined the COS system with the AT&T UNIX System V. This advance was especially important because UNIX was well established as the industry standard, especially in areas of scientific application, where supercomputing has been so useful; meanwhile an advanced Cray Fortran Compiler, named CF77, was also made available.

By the mid-1980s Cray Research began working on another generation of supercomputers, again following several paths. In 1986, Chen began working on a new system of highly innovative design, relying on significant technological advances in five different areas. After spending nearly $50 million on the project, the company decided to discontinue it. Chen left the company in 1987, taking 45 engineers from Cray Research, to form Supercomputer Systems, Inc., with plans to build a supercomputer using as many as 256 microprocessors.

Seymour Cray completed design work on the CRAY-3 supercomputer system in 1987. The CRAY-3 marked another effort to use gallium arsenide chips, a prospect made more feasible by the production of the first of the new type of chips suitable for computer production in the 1980s. While awaiting the CRAY-3, the company developed and introduced the CRAY Y-MP system, which combined the power of eight central processing units to give it 30 times the power of the original CRAY-1.

Cray Research passed two important milestones in 1987. First, it delivered its 200th computer system, especially noteworthy since it had taken from 1976 to 1985 to reach a total of 100 computer shipments. This rapid expansion made possible the second milestone, the inclusion of Cray Research among the nations largest companies, listed in the Fortune 500. This period of rapid expansion was possible because the company was able to market its supercomputer systems to commercial corporations engaged in petroleum exploration, automobile production, and the aerospace industry.

Cray Research underwent a major restructuring in 1989. Delays in the development of the CRAY-3 system were creating very high research costs, and the scheduled date for completing the project was reportedly postponed. In addition, the company had embarked on another project, the C-90, as a new stage in the CRAY Y-MP product line. Rather than discontinue one of the projects, Chairman John Rollwagen decided to create a new company, Cray Computer Corporation, to be headed by Seymour Cray. Located in Colorado Springs, Colorado, Cray Computer would continue the development of the CRAY-3 supercomputer. On November 15, 1989, Cray Research issued shares of Cray Computer to its stockholders, retaining a 10% ownership in the new company. Seymour Cray resigned from the board of directors of Cray Research, severing formal connections with the company he had formed, although he remained a stockholder.

Even after this spin-off Cray Research retained a solid position as the leading company in the production of supercomputers, with about two-thirds of the world market. In 1989, it phased out the CRAY-2 and CRAY X-MP as new models of the CRAY Y-MP were coming on-line. There were continuing plans for development of the C-90 project, which was renamed the CRAY Y-MP/16. The company also began development of enhanced systems for supercomputer networking to facilitate scientists access to Cray supercomputers from a variety of other types and brands of computers. In addition, there were plans to bring to the market an entry-level supercomputer, which would use the technology of the CRAY Y-MP, but would have a much lower price with reduced installation and operating costs. Cray Research maintains a policy of investing 15% of its revenue in development and engineering.

As the market for supercomputers expanded, Cray Research diversified its sales efforts both in terms of type of customers and geographic region. In 1989 governments remained the largest customers, buying 31% of Cray Researchs output; other important purchasers of Cray machines included universities, aerospace, petroleum, and automotive companies, energy producers, and weather and environment analysts. Sales in North America that year were 61% of the total. Approximately 75% of revenue between 1987 and 1989 was derived from sales of computer systems, with remaining income from leased systems and service fees. In addition to its corporate headquarters and software support operations in Eagan, Minnesota, Cray Research has manufacturing and development facilities in Chippewa Falls and Rice Lake, Wisconsin, and support operations in Mendota Heights, Minnesota. It maintains sales offices in 29 cities throughout the United States and has 19 subsidiary operations in other countries.

By the beginning of the 1990s, Cray Research was facing increasing competition from Steve Chens Supercomputer Systems, backed by IBM. Once the newly formed Cray Computer enters into the production of the CRAY-3, it is expected to be a formidable competitor. Even more important, Japanese companiesFujitsu, Hitachi Ltd., and NEC Corporationhave entered the supercomputer market. NEC developed the SX-3 which, by linking four processors, is six times as fast as the CRAY Y-MP. Fujitsu planned to introduce the VP-2000. Their capabilities, however, will be surpassed by those of the CRAY-3. Further, speed is not the only measure of supercomputer performance. Capacity measured by the number of parallel processors and software capability must be factored into a machines performance rating. Given these factors, the standard Cray Research supercomputer is still able to handle large problems much faster than the new competitors from Japan.

The presence of Japanese producers in the market for supercomputers raised concerns that the same process whereby Japanese producers captured the U.S. and world markets in automobiles, personal computers, and consumer electronics might take place in the supercomputer industry. Part of the concern rested on the fact that much of the basic research on supercomputers done by Japanese companies was government sponsored and that the Japanese firms entering the supercomputer market were large computer-manufacturing companies with much greater resources than Cray Research. By early 1990, the office of the U.S. Trade Representative, the agency responsible for monitoring trade disputes and imposing sanctions placed a high priority on investigating claims of Japanese protectionism in its domestic supercomputer market.

Cray Research still has substantial advantages in systems and applications software, and its UNICOS and COS software are now the standards for supercomputers. It has also been able to make itself felt in the Japanese market by installing 20 supercomputers there by 1990. By mid-1990, only three Japanese supercomputers were imported into the United States. In part this low level of imports was the result of a boycott of imported supercomputers. The Department of Defense was prohibited by law from purchasing supercomputers from non-U.S. manufacturers, and most other purchasers voluntarily followed suit.

Cray Research is taking measures to provide for better distribution of its products. It has entered into an arrangement with Control Data to make Cray supercomputers available to Control Datas customers, using Cray products to replace Control Datas line of supercomputers that was discontinued in 1989. Marcelo Gumucio, who directed Cray Researchs marketing operation, was named president and chief operating officer in 1988. By placing more emphasis on the marketing of its products, with less attention paid to product development, Cray Research anticipated that it would be better able to meet the challenges of international competition in the supercomputer industry.

In 1990 Rollwagen asked for Gumucios resignation as president and chief operating officer because of his formal management style. Gumucio had increased the number of reports and procedures required of employees for the purpose of setting specific goals, a strategy to combat the increasing competition the company was facing. Rollwagen resumed operating responsibilities. His management style aimed at freeing design experts to follow their own interests in research. The goal of this strategy was to enable Cray Research to meet competition by continual innovation in the companys products.

Principal Subsidiaries

Cray Asia/Pacific, Inc. (Hong Kong); Cray Computadores do Brasil Ltda. (Brazil); Cray Research (Canada) Inc.; Cray Research France S.A.; Cray Research GmbH (Germany); Cray Research Japan, Ltd.; Cray Research (UK) Ltd.

Further Reading

Schatz, Willie, Whos Winning the Supercomputer Race? Datamation, July 15, 1989; Mitchell, Russell, The Genius: Meet Seymour Cray, Father of the Supercomputer, Business Week, April 30, 1990.

Donald R. Stabile

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"Cray Research, Inc.." International Directory of Company Histories. . Encyclopedia.com. 10 Dec. 2017 <http://www.encyclopedia.com>.

"Cray Research, Inc.." International Directory of Company Histories. . Encyclopedia.com. (December 10, 2017). http://www.encyclopedia.com/books/politics-and-business-magazines/cray-research-inc

"Cray Research, Inc.." International Directory of Company Histories. . Retrieved December 10, 2017 from Encyclopedia.com: http://www.encyclopedia.com/books/politics-and-business-magazines/cray-research-inc