It was to be expected. When a one-time tech powerhouse winds up bankrupt and sold off for chump change, that's bound to ignite the daily bloviation fest.
So it was that one and all are today offering their dutiful ruminations on the cosmic import of SGI's acquisition by Rackable Systems for a paltry $25 million.
This is not so complicated. SGI was a comet, soaring through the tech firmament during its brief moment of glory. But it's only one in a list of former high-flyers to come crashing back to earth, a roster that includes the likes of Novell, Borland, WordPerfect, Digital Equipment, Wang, Data General-well, you get the point. The company made mistakes, like a big bet on Intel's Itanium. Also, management was slow to respond to the emergence of lower-cost alternatives to SGI's fancy (read: expensive) computers. If Harvard's Clayton Christensen ever wants to add another chapter to his previous work on the impact of disruptive technologies, SGI offers the classic example.
But somehow, I can't muster the necessary shock, especially when you consider the hard times in Detroit. Seriously, who ever expected to see the day when General Motors--General Motors!--would totter on the verge of bankruptcy? Now that's a shock of near-existential proportion.
GM was an icon of American manufacturing while SGI briefly figured among the leading lights in the tech firmament. But the companies' twin fates underscore how right Andy Grove was about the fate of companies that fail to be sufficiently paranoid. Here's what he wrote in 1996 and it's worth repeating:
"...when it comes to business, I believe in the value of paranoia. Business success contains the seeds of its own destruction. The more successful you are, the more people want a chunk of your business and then another chunk and then another until there is nothing left."
Amen to that and SGI proves the point in spades. Today's news should get printed out and pasted to cubicles all across the tech world. Will it? What with Silicon Valley's famous chronic self-absorption, it's anyone's guess whether any of this is going to make much of a dent. But the optimist in me wants to believe that even the most raging egos must know that all glory is fleeting.
We'll see.
Finishing off his column for Wednesday's edition of The New York Times, Tom Friedman offers a novel suggestion:
Somebody ought to call Steve Jobs, who doesn't need to be bribed to do innovation, and ask him if he'd like to do national service and run a car company for a year. I'd bet it wouldn't take him much longer than that to come up with the GM iCar.
No, it's not a GM
(Credit: Tesla Motors)Friedman obviously doesn't expect General Motors to act on the idea (although Jobs did simultaneously manage both Apple and Pixar for nearly a decade). His larger point, I think, was to contrast the mindsets that prevail in Silicon Valley and Detroit. And as the political powers try to grapple with the fate of GM and the U.S. auto industry, they must be wishing there was a way to perform a gene graft.
In his piece, Friedman approvingly cites a column in The Wall Street Journal by Paul Ingrassia, who used to run that paper's Detroit bureau. It deserves quotation in length:
"In return for any direct government aid," he wrote, "the board and the management (of GM) should go. Shareholders should lose their paltry remaining equity. And a government-appointed receiver--someone hard-nosed and nonpolitical--should have broad power to revamp GM with a viable business plan and return it to a private operation as soon as possible. That will mean tearing up existing contracts with unions, dealers and suppliers, closing some operations and selling others and downsizing the company...Giving GM a blank check--which the company and the United Auto Workers union badly want, and which Washington will be tempted to grant--would be an enormous mistake."
So on and so forth. But as important as all this is, these are process questions to get GM through the near term. However, the salvation--not just for GM but the entire American auto industry--depends upon the sort of innovation that has helped the technology business thrive through several economic cycles.
Without putting Jobs on a special pedestal, he embodies a textbook example of how creativity can rescue a near-moribund operation. After Jobs returned to Apple in 1997, he did not hesitate to pull the plug on dead-end projects like the Newton, or ruffle feathers by cutting off the Mac clone makers. At the same time, he infused Apple with a design aesthetic that manifested itself in the development of products such as the iMac, the Mac OSX, the iPod, and the iPhone. None of this was preordained; it was the result of innovative thinking and fast execution.
Now contrast Apple's experience with that of GM. That company let itself get addicted to churning out hulking gas guzzlers because that's where the easy money came from. Energy was relatively cheap and management's thinking was that "green" was the purview of left-wing pansies who ran San Francisco. (GM Vice Chairman Bob Lutz, who is on record dismissing the potential of hybrid autos, also was quoted saying that global warming was "a total crock of [expletive deleted].")
I don't want to get into the debate over global warming today, but Lutz and the rest of GM's management was unprepared when energy prices spiked and consumer demand shifted abruptly. Is it any surprise, then, to learn that more forward-looking approaches to the auto industry's future have come courtesy of some old tech names like Shai Agassi and Elon Musk.
A former SAP exec, Agassi is attempting to build out an electric car network. Musk, a serial entrepreneur best known as a co-founder of PayPal, now oversees a start-up developing a line of luxury electric cars. (Unfortunately for Tesla, the market meltdown forced it to fire about one-fourth of its full-time workers and delay production of one of its models.) It's hard to know whether Agassi or Musk will be able to make it. If they fail, though, it won't be due to lack of imagination.
Imagination. That's what built the auto industry in the first place. So why can't history repeat itself. Maybe a Jobs, a John Chambers, or a Sergey Brin can help offer an answer. Too bad they won't get the opportunity.
BusinessWeek selected the perfect headline to sum up General Motors' about-face: "Small is the new big."
CEO Rick Wagoner: Tech will be the difference
(Credit: General Motors)In recent months, CEO Rick Wagoner has signaled that change was in the offing and that the company's future depended upon more fuel-efficient vehicles. (Check out this interview we did with him at the Consumer Electronics Show in January.) With the stock approaching a 26-year low, there's more than the usual urgency to shake things up.
So it was that today GM announced reversed its years-old strategy in what likely was a surrender to $4-plus gasoline prices at the pump for many Americans these days. Among the highlights:
• A possible sale of GM's Hummer brand
• The closing of four truck plants
• Board approval to fund the Colt, GM's extended-range electric vehicle.
"The Chevy Volt is a go," said Wagoner, adding that GM expects to have a production version of the Volt ready "in the very near future" with the vehicle being ready for sale at the end of 2010. "We believe this is the biggest step yet in our industry's move away from our historic, virtually complete reliance on petroleum to power vehicles."
If GM hits the 2010 deadline, it means a lot of pressure from this point. When we spoke with Wagoner earlier in the year, he said that the technology challenges getting a vehicle from concept car to market usually take about four years to resolve.
You'll say, "Why can't you do it in two years?" and that's vehicle development. In this case we're basically doing kind of three things simultaneously: the vehicle side, which I have a high degree of confidence we can do; the battery side, which is progressing very well, but this is--we're basically pushing the technology needle to do everything that we want out of a battery technology. I would categorize that as emerging as opposed to highly developed; then just the electronic interface of all that is different, it's doable but it's different. We learned a lot back when we did the EV1, but there's a whole lot more electronics on a vehicle today than it was then. Going for 2010 was a stretch. It's still a stretch, but we're putting resources like crazy on it and we haven't seen anything to date which says that we've hit a glitch on it.
In interviews over the last year, Wagoner has often pointed to the increased importance of electronics in delivering vehicles consumers will want. That's no longer an academic observation. What with the skyrocketing cost of fuel, GM's ability to prove it has the necessary tech chops could very well be the margin of difference between success and failure.
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