Where I grew up in the Midwest in the 1970s and early 80s, Cray was synonymous with supercomputing. Back then, a supercomputer was a top-flight machine that could perform a few hundred million floating point operations per second (“flops”). That was good enough to help scientists do intensive calculations in areas like weather forecasting, climate modeling, and nuclear weapons simulations. Cray’s first supercomputer, the famed Cray-1, was bought by Los Alamos National Laboratory for $8.8 million in 1976; eventually, some 80 of the machines were sold, for $5 million to $8 million a pop.
Today, your average desktop computer is far more powerful than a Cray-1, and so the definition of “supercomputer” keeps changing to keep up with the times. But one thing has not changed. Cray (NASDAQ: [[ticker:CRAY]]) is still a major player in the space, despite a long history of ups and downs. The company, which began in 1972 as Cray Research in Chippewa Falls, WI, was bought by Silicon Graphics in 1996 for $767 million, and then was reborn in Seattle in 2000 following a $50 million merger with Tera Computer (which was renamed Cray). Since then, it has been a long uphill climb to get back near the top of the supercomputing heap against heavyweight competitors like IBM and Hewlett-Packard.
Nobody better to tell that story than Peter Ungaro, the chief executive of Cray. I recently had a chance to speak with Ungaro by phone at his Spokane, WA, office about his company’s strategy and recent history, the technical challenges involved in modern supercomputing, and innovative ways of gaining new customers (how do you sell someone a $10 million machine?). What impressed me was his ability to lay out the financial concerns of his company while also diving deep into the technological aspects of supercomputers—how they will interact with cloud computing, how computational records will continue to be broken, and when computers might exceed all processing capabilities of the human brain.
First off, I wanted to know how Ungaro (left) defines a “supercomputer” these days. Some would say it should be one of the 500 fastest machines in the world. Others would say it’s a machine used for scientific and technical problems that costs more than a certain amount. Ungaro’s definition is simple and focuses on the bottom line. “We like to think of supercomputers as costing more than a million dollars,” he says.
Ungaro, a Washington State University alum, joined Cray in 2003 to run sales and marketing as senior vice president. He had been at IBM for 13 years, most recently running its high performance computing group, a $2 billion business inside Big Blue. Why did he make the jump to Cray? “I really loved the supercomputing space,” Ungaro says. “Customers are doing really interesting things. I really wanted to try and see what a smaller company was like. Even at $2 billion, you’re only 2 percent of IBM’s revenues.” In short, like many entrepreneurs, he wanted to have more impact. “There was no better place to go than Cray. It was a natural move.”
But Cray had its share of problems. The company had struggled to get its next-generation supercomputer product ready, and 2004 was “really rough,” Ungaro says. Cray was losing money and
