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Interview: Leipzig Gears up for ISC’13

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Interview: Leipzig Gears up for ISC’13

Mr. Uwe Albrecht, deputy mayor of Leipzig

This year the International Supercomputing Conference moves on to a new location in the the city of Leipzig, Germany. To learn more about what this historic city has to offer, insideHPC caught up with Uwe Albrecht, the deputy mayor of Leipzig.

insideHPC: What natural advantages does Leipzig enjoy that has made it a major center of trade and commerce in Europe? During the DDR era, Leipzig remained the primary city for commercial exhibitions in Eastern Europe, continuing its historical legacy as a trade center. How has that shaped the city of today?

Uwe Albrecht: International commerce and trade fairs go back a long way in Leipzig. Being at the crossroads of two major trade routes, the east–west Via regia and the north–south Via imperii, Leipzig began to flourish 850 years ago. In 1497, Emperor Maximilian I passed an edict protecting the Leipzig Fair. Over the centuries, people from different places met up here to exchange not only goods but also ideas, a process which molded Leipzig into a cosmopolitan city.

In the mid-nineteenth century, Leipzig developed into a major industrial centre, chiefly thanks to industrial pioneer Karl Heine. The construction of machinery factories as well as railway lines, roads and canals prompted rapid growth. By the early twentieth century, Leipzig had become the biggest industrial location in Saxony and one of Germany’s key cities.

The end of East Germany was quickly followed by economic collapse in the early 1990s as long-standing markets mainly in Eastern Europe disappeared. Heavy industry largely ground to a halt and industrial jobs declined by about 90pc. Employment in mainly new industries had to be created for thousands of people.

As a result, a massive shift to the service sector took place. Leipzig is now still the foremost financial location in central Germany.

Nowadays, Leipzig is the vibrant centre of a thriving region characterized by innovative processes of transformation and with a population of 1.7 million. With the European Union expanding to the east and south-east, Leipzig suddenly found itself at the centre of the EU and is increasingly acting as a hub between east and west. The roads, rail links and airways have all been improved thanks to foresighted planning – and are now coming into their own.

On the basis of a study carried out by the Office for Economic Development and HHL Graduate School of Management, economic sectors with especially strong potential were identified. Under the motto ‘strengthening the strengths’, emphasis is placed on developing five high-growth clusters: Automotive & Suppliers, Media & Creativity, Healthcare & Biotech, Logistics & Services, and Power & Environment.

There’s been no shortage of good news lately regarding the region’s economy. BMW’s Leipzig car plant for instance is currently being turned into the electromobility hub of the entire BMW Group, creating 800 new jobs in the process. Porsche has decided to build its latest model, the Macan, in Leipzig, which means 1,000 new, high-quality jobs for the region.

DB-Schenker, a subsidiary of Germany’s national rail operator Deutsche Bahn, is expanding its logistics terminal and almost doubling its 800-strong workforce. Meanwhile Haema (Germany’s biggest independent blood donor service), Vita 34 and c-Lecta are all continuing to expand, bolstering Leipzig as a medicine and biotech powerhouse.

Other successes include investments by Amazon, DHL, Aerologic and Future Electronics, the expansion of the German Biomass Research Centre, and the opening of the new technology centre for Yamazaki Mazak – the world’s largest manufacturer of machine tools.

insideHPC: Prior to World War II, Leipzig was also a major center of music, education and publishing. And even though it remained as an economic powerhouse under the East German regime after the war, its cultural importance appears to have declined. What happened?

Uwe Albrecht: Answering your previous question, I mentioned successful examples which put your assessment of Leipzig’s economic development in a different light. But although I’m an official representative of Leipzig, that’s not just what I think! The future of our region has been assessed very positively by external experts, too:

  • The latest ranking by prominent business magazine Capital placed Leipzig in first place in Germany for its dynamic economy spanning a decade. The study explored how Germany’s top sixty towns and cities will develop until 2017 in terms of economic muscle, jobs, population and purchasing power.
  • It concluded that Leipzig’s economic output will climb by a fifth by 2017. With the population rising by 1.6pc over this time, the number of jobs is expected to increase by 7.2pc, causing spending power per head to rise by a tenth.
  • In the Capital ranking in 2011, Leipzig was rated the city with the fourth-strongest economy in Germany, only eclipsed by Hamburg, Munich and Frankfurt. Leipzig has risen 45 places since 2001.
  • Leipzig garnered top positions in the Financial Times Group ranking in both 2010/11 and 2012/13.

Leipzig is no longer the city that it once was in the nineteenth century. After all, the world has moved on. But since German reunification, many visitors have come to Leipzig. They want to meet the people who took part in the Peaceful Revolution, to be in the city where Johann Sebastian Bach directed St Thomas’s Boys Choir for twenty-seven years, and to simply enjoy Leipzig’s lively, varied atmosphere. Every year, the city invests a sizeable chunk of its budget in the Gewandhaus concert hall, Leipzig Opera House and Leipzig Ballet, and also supports organizations staging plays, concerts and festivals.

Leipzig was and remains an important centre of education and vocational training. Research institutes and establishments of higher education with internationally acclaimed expertise strengthen Leipzig’s healthy reputation in academic circles as well as among captains of industry and the general public.

As far as internationality is concerned, Leipzig International School including an international preschool and the Reclam School offering the dual Franco–German baccalaureate known as the Abibac are hard to beat.

Leipzig has Germany’s second-oldest university with uninterrupted teaching and has a proud pedigree of science and scientific training. By the way, German Chancellor Angela Merkel took her physics degree in Leipzig.

The written word enjoys special status in Leipzig. Historically rooted in the flourishing publishing sector during industrialization and a pioneering newspaper market, Leipzig’s role as a city of printing and publishing has since changed. In recent years a number of young publishing houses with very different profiles have emerged.

Local training in printing technology, publishing and journalism sets the standard throughout Germany. Literature plays an important part in local education and culture, large printing companies and small firms produce high-quality printed products, and publishers are tackling the challenges of digitization and design. It’s an exciting industry in exciting times!

The high status attributed to the written word by the public is demonstrated every year by the popularity of the Leipzig Book Fair, which was held from 14 to 17 March, accompanied by the festival Leipzig Reads. A year ago, the German National Library in Leipzig and Frankfurt celebrated the centenary of its foundation in Leipzig with a magnificent extension augmenting the main building.

Leipzig became the cradle of the world’s first daily newspaper upon the publication of Einkommende Zeitungen in 1650. Just under 250 years later, local paper Leipziger Volkszeitung was printed for the first time. The Leipzig newspaper market is now facing fresh challenges with the advent of digitization. All publications in Leipzig benefit from well-trained new recruits. The Department of Journalism at Leipzig University and the Leipzig School of Media enjoy an enviable reputation in the industry. And to encourage good journalism, every year the Sparkasse Media Foundation awards the Leipzig Media Prize in a number of different categories.

With establishments of higher education such as the HGB Leipzig Academy of Visual Arts, Leipzig University, HTWK Leipzig University of Applied Sciences, and Leipzig School of Media, the city has developed from the centre of the German-language publishing industry to the foremost centre of training in the world of publishing.

insideHPC: What is Leipzig doing today to reinvigorate its image and cultural heritage?

Uwe Albrecht: Leipzig’s great musical heritage continues to have the biggest international impact. But Leipzig’s cultural image should by no means be confined to its history! St Thomas’s Boys Choir, once directed by Bach, can be heard performing the weekly motet at St Thomas’s Church. The buildings where Mendelssohn, Schumann and Grieg once lived and worked have been painstakingly restored and now also serve as concert venues. Along with five other places, they make up Leipzig’s application to become designated a World Heritage Site. And whenever you walk through the city, you’re bound to see someone carrying an instrument or hear young musicians practicing through the open windows of the municipal school of music. A few years ago, we launched a very successful campaign to get primary school children interested in singing. Leipzig may have a long history, but it’s also a young, vibrant city – with a university right at the city centre.

insideHPC: Bach, Mendelssohn, Schumann, Wagner, and others established a rich musical tradition here. What is the music scene like in the city today and what does the future hold?

Uwe Albrecht: Leipzig is one of Europe’s foremost cities of culture. Highlights include the Gewandhaus Orchestra and St Thomas’s Boys Choir, the city’s vibrant arts scene, and a wide variety of fascinating museums. And this exceptional diversity is continuously fostered by above all Leipzig’s citizenry and farsighted business classes.

insideHPC: Leipzig University, one of Europe’s oldest institutions, has nurtured some great scientists, including Nobel Prize laureate and physicist Werner Heisenberg. What role do you see for science and technology?

Uwe Albrecht: The economic region of Leipzig has enormous R&D potential at its disposal thanks to Leipzig University, 10 other colleges and universities, 3 Max Planck Institutes, 2 Fraunhofer Institutes and a host of non-university research centres. Leipzig University cements its reputation as an important centre of research with its interdisciplinary research activities, including in 5 collaborative research projects, 7 postgraduate research units, 3 international postgraduate programs, 3 international Max Planck research schools and 4 DFG German Research Foundation groups. Particularly important are the almost 450 joint projects with industry, including 72 with regional companies as of 2011, ensuring that research findings are swiftly put to practical use.

BIO CITY LEIPZIG, including Leipzig University’s BBZ Centre for Biotechnology and Biomedicine, thrives on its stimulating atmosphere for young firms and successful start-ups. Six distinctive inter-faculty research departments have been set up Leipzig University to encourage cooperative research projects. They are entitled ‘From molecules and nano-objects to multifunctional materials and processes’, ‘Mathematics and its applications in the sciences’, ‘Molecular and cellular communication: biotechnology, bioinformatics and biomedicine in therapy and diagnosis’, ‘The brain, cognition and language’, ‘Risky orders’ and ‘The changed environment and disease’. And they are joined by concentrated research into biodiversity.

Apart from Leipzig University, various other institutions such as HTWK Leipzig University of Applied Sciences, HfTL Deutsche Telekom University of Applied Sciences for Telecommunications, and HHL Graduate School of Management have made a name for themselves far beyond Leipzig as important research centres. Examples of its internationally renowned research institutes include the three Max Planck Institutes, and the institutes in the Fraunhofer Society and the Gottfried Wilhelm Leibniz Scientific Community.

insideHPC: In general, where do you think Leipzig’s future economic growth will come from?

Uwe Albrecht: The future has already been mapped out. Until 2020, we will consistently execute our cluster strategy, which is currently being revised.

  • In the automotive industry, Leipzig will become the foremost location in Germany and Europe for premium-segment electric vehicles.
  • Leipzig will continue to strengthen its position as a European hub of goods and services. Logistics and Internet retail are set to play a lasting role in the region.
  • The Alte Messe biotech campus will be reinforced by additional investment by both commercial enterprise and research institutes.
  • Leipzig will be an important centre of excellence for energy – especially renewables – and the environment.
  • The new media and above all the creative sector will spark developments in more traditional sectors and become an important driving force for Leipzig and its economy.

Although major investments are important for the city, the backbone of economic development in Leipzig is made up of its wealth of small and medium-sized enterprises. These SMEs drive innovation, account for the bulk of jobs, and contribute the lion’s share of vocational training. Therefore, the framework needs to be improved in particular for this group of companies.

insideHPC: Clearly, with the new Congress Center, Leipzig is positioning itself as a tech-savvy host for conferences such as the International Supercomputing Conference (ISC’13). Can you talk about the role of technology in the region and your views on Silicon Saxony? How important is it that high-performance computing experts from around the world will get to know Leipzig, and vice versa?

Uwe Albrecht: I think that Congress Center Leipzig is a great choice for the International Supercomputing Conference ISC’13. In 2012, the CCL Congress Center Leipzig was voted ‘Best Congress and Convention Centre’ by readers of British trade magazine Business Destinations and corporate travel centre directors of the world’s top 500 companies. And last year it hosted over 100 congresses and conferences attended by more than 100,000 participants.

As the Deputy Mayor of Economic Affairs and Employment, I’m of course proud and thrilled that the main supercomputing conference will be held in Leipzig and that 2,500 system managers, researchers from higher education and business as well as developers from 50 countries will be meeting up to talk shop in keynote speeches, panel discussions and workshops. I see this as a show of confidence in Leipzig.

Saxony has a unique concentration of companies with expertise in the fields of micro- and nanoelectronics, photovoltaics, organic and printed electronics, energy-efficient systems, telecommunications technology and networked sensors. Silicon Saxony, Europe’s biggest network in these industries, links up more than 300 members in Saxony, including manufacturers, suppliers, service providers, universities, research institutes and public institutions.

The dovetailing of research, development and engineering taps important potential for the innovative power of our region. Research working hand in hand with industry goes back a long way in Leipzig.

The latest gratifying example is the press release from HTWK Leipzig University of Applied Sciences, according to which researchers from the iP³ Institute are participating in the Organic Electronics Saxony network, incorporating their expertise in printing technology to develop organic electronics to market readiness.

The conference will address topics such as petascale computing, big data, exascale architectures, cloud computing, network technologies, the state of the art in HPC applications and data management. The Department of Computer Science at Leipzig University explores some of these topics and their usage in business.

The field of service science – researching the service sector – is also playing a growing role in Leipzig. Its task is to develop innovative, knowledge-intensive services supported by high-technology in conjunction with industry. This is an area whose international importance is climbing and it’s ideally represented by the universities and research centres in Leipzig.

Leipzig’s training opportunities are a big advantage for the city. Graduates from Leipzig help their employers keep their business on track. And they’re one reason why the ICT industry is such an important driving force in Leipzig’s economy.

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IDC: HPC Server Market Delivers Record Revenues and 7.7% Growth in 2012

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This week IDC reports that worldwide factory revenue for the HPC technical server market increased by 7.7% year over year in 2012 to a record $11.1 billion, up from $10.3 billion in 2011. In their Worldwide High-Performance Technical Server QView, IDC notes that the 2012 results exceeded their forecast of 7.1% year-over-year revenue growth.

2012 was an exceptionally strong revenue year for the high-end Supercomputers segment, which grew 29.3% year over year,” said Steve Conway, IDC Research Vice President for Technical Computing. “IDC does not expect the high end of the market to continue growing at a pace this swift.”

Other highlights from the report include:

  • IBM led all vendors with a 32.0% share of overall factory revenue, closely followed by HP with a 30.8% share.
  • Dell once again was a strong third-place finisher, capturing 13.5% of worldwide technical server revenue.
  • Unit shipments in 2012 declined 6.8% year over year as average-selling prices grew, reflecting the continued shift to large system sales.

Read the Full Story.

In related news, IDC’s HPC User Forum will take place in Tucson, Arizona on Apri 29 – May 1.

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Four DoE Booths Canceled at SC12 After New Travel Restrictions

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The SC12 exhibit floor is going to look a lot different this year as a result of new Department of Energy travel restrictions. The SC12 committee has confirmed that four DoE organizations have already cancelled their booth requests: Brookhaven, Los Alamos, NNSA, and Sandia. And while all four organizations plan to send personnel to Salt Lake in November, this is certainly a setback for the conference.

As reported here, the new DoE restrictions come in the wake of the GSA travel scandal that had lawmakers in an uproar this past Spring. The new policies severely limit conference spending and the number of DoE staffers allowed to travel to any given show.

One official we talked to described the changes as an overreaction: “the type of response one would expect from government, especially in an election year.” But this is just the beginning. A proposed bill that would severely limit travel, called the Government Spending Accountability Act of 2012 is now making its way through Congress. And while the overall fallout of the GSA scandal continues to unfold, the industry reaction to these changes has been swift; a number of trade shows focused on the federal space have already been cancelled this year.

As for what will happen with the other DoE booths at SC12, the jury is still out.

While there is uncertainty stemming from new restrictions on federal government participation in conferences, DOE has not yet made a decision on how those rules will affect the labs and their attendance at SC12,” said Ian MacConnell, SC12 Communications Co-Chair. “We have made contingency plans, but are waiting on decision before moving forward.”

The HPC community has been abuzz with rumors that other federal agencies such as NASA and DoD will be pulling back on travel as well. According to MacConnell, no official word has come down to that effect and SC12 show management anticipates continued participation by those organizations.

So the question remains; what will happen this year at SC12? According to MacConnell, the conference is looking stronger than ever, with a record number of papers accepted this year. “The committee is focusing our efforts on SC12 and are looking forward to a vibrant conference with a great technical program,” he said.

In what may be a silver lining to this story, insideHPC knows of several vendors who are interested in purchasing the SC12 exhibit space being vacated by the labs. Like they say, The show must go on.

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Posted in Events, HPC, National and Legislative Action, SC12 | 1 Comment

Video: Swift Leaves the Wind Tunnel Behind

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In this video, John F. Winkler from Swift Engineering describes how the company is using HPC to develop innovative automotive technologies.

As detailed in our recent podcast, Swift was able to and de-commission its wind tunnel after switching to CFD modeling on their Cray CX1000 supercomputer managed by Platform HPC software. Read the Full Story.

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This Week on inside* Publications

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In case you missed them, here are some highlights our inside* publications this week:

 

  • Video: Nicira Startup Virtualizes All Things Cloud. Martin Casado from Nicira describes the company’s Network Virtualization Platform (NVP), and OpenFlow solution that takes workloads and puts them in a world where everything they see is virtual.

 

 


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Podcast: Swift Engineering Moves Beyond the Wind Tunnel with Cray and Platform

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In this podcast, John Winkler, Chief Aerodynamicist at Swift Engineering describes how the company is using HPC to bring Formula Nippon cars and jet planes to market. Using a Cray CX1000 supercomputer managed by Platform HPC software, the company was able to switch fully to computational fluid dynamics modeling and de-commission its wind tunnel.

Prior to deploying Platform HPC, Swift relied solely on an in-house, two-workstation solution. With Cray and Platform support services and the ease-of-use delivered by the Platform HPC management interface, Swift was able to transition to a full-scale HPC cluster within one week. Swift engineers can now evaluate concepts within hours instead of days and make design changes in real time. Moving forward, Platform HPC will be used to manage crash simulation, Finite Element Analysis (FEA), and CFD jobs so that Swift can run more complex workflows for multiple vehicles.

Read the Full Story * Download the MP3 * Subscribe on iTunes * If Dropbox is blocked, download from this Google page.

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Epiphany Chip to be Powered by SWARM Programming Environment

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This week multicore chipmaker Adapteva announced that it will use the SWARM runtime machine to run on its Epiphany multicore processor. SWARM (Swift Adaptive Runtime Machine) provides an intermediate layer programming environment that supports application development.

“The Epiphany microprocessor redefined the meaning of real-time computing and will allow for the introduction of advanced applications not even feasible on current quad-core devices – but none of these applications will be possible without an efficient and scalable programming environment. After designing the architecture, we had to find the software solution that would allow developers to fully utilize the power of the parallel environment to create more sophisticated applications. ETI’s SWARM technology provides the combined ease-of-programming and specialized many-core capacity necessary to deliver this development capability.”

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ETI’s SWARM Tops Graph 500

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This week E.T. International, Inc. (ETI) announced significant Graph 500 speed improvements using the company’s SWARM (SWift Adaptive Runtime Machine) system software.  Graph 500 execution time was increased by up to 11-fold over MPI, vaulting it into the top two on the current Graph 500 list. The tested system had 256 nodes (Scale 33), delivering 6.9 giga-edges per second (GE/s), and at 128 nodes (Scale 32), 4.2 GE/s.

“ETI has been working with Intel to deliver a runtime system meant for the most advanced many-core systems in the world,” said Rich Collier, COO of ETI. “Our proven experience in software system design for many-core heterogeneous architectures has allowed us to implement Graph 500 with SWARM to demonstrate the enabling power of our programming environment. We are very proud to prove the efficiency and speed of our SWARM technology with these performance numbers for Endeavor, and we look forward to continuing to achieve benchmark performances like these as we bring the system software to the rest of the world’s top supercomputers.”

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Cray Forms Business Alliance With IRL Race Car Designer

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Next generation IndyCar Series race car chassis designs are quickly coming to fruition.  The 2012 design year sneak peeks were leaked by race car company Swift Engineering.  Alongside the release was a side note on various new business partnerships that Swift has formed in the design and implementation process.  Oddly enough, Cray was highlighted as a major business partner.

Individually, each one of these partnerships is critical to Swift’s continuing commitment to motorsport; however, collectively and in conjunction with one another they will help us set new industry standards in innovative design, manufacturing and support,” Jan Wesley Refsdal [Swift's President] stated.

According to the source article, Cray’s machines will be utilized at the Swift research facility to augment CFD design processes.

Speed-to-market is critical in any business, but probably more so in racing as the green flag doesn’t wait for anyone,” Refsdal said. “Rapid development is just as much about the speed and quality of the design process as it is manufacturing. We are evolving our four-year exclusive certified composite repair relationship with Mark One Composites, Inc. to provide further manufacturing and inventory support directly to teams from its Indianapolis-based facility.”

Very cool stuff.  For more info, read the source article here.

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Cray CEO responds: “Yes, we can make money at the high end of HPC.”

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Cray logoAt the end of October Cray announced financial results for their fiscal third quarter, ended Sep 30. Revenue was up, but the company reported a loss for the quarter. As I noted in that piece this is not unusual: Cray is nominally a $200-$300M per year business with a focus in the high end of HPC. In that rarefied market, individual deals can be 25% or more of a Cray’s yearly income, and a slipped acquisition or acceptance schedule can rapidly turn a single quarter from a profit to a loss. For Cray it makes more sense to track the company’s performance on an annualized basis. On the face of it the news here is not good either though: the income statement shows a loss in each of the past three years.

My writeup on the financial results got a few comments, including one who challenged the fundamental business model of a company like Cray

Yes they are in the high end but why make excuses for the fact that they can’t make money – maybe greater diversification is needed or their business model is flawed. Almost every quarter there is some write down, order/product delay, higher cost followed by the CFO saying if we didn’t have these we would have been profitable. Last night I missed the lottery by one number therefore I should consider myself a millionaire.

That got me to thinking about whether Cray and company’s like it that focus exclusively on the high end are doomed to starve in a market too small to support the R&D they need to do to compete. I certainly hope this isn’t true, because the country needs high end HPC in the same way that it needs submarines, another critical technology to our nation’s global stature that has no commercial market. And HPC today actually has more going for it than submarines: today’s supercomputers are built from commodity parts and the technologies can often be scaled down to sizes that are right for workgroups and businesses, creating potential downstream markets for technology at the high end.

But I’m a writer and a consumer of HPC goods and services, not a producer of either, and rather than spilling 1,000 words navel-gazing about the HPC business I wanted to get the company’s own take on its business model. So I talked with Peter Ungaro, Cray’s CEO and President, to try and understand how he sees his company’s business and the market he’s chosen. I opened with a direct question — is it possible to make money in the high-end of HPC? Ungaro’s answer? “Yes.”

“Yes.”

Peter UngaroWhat’s behind that “yes” is the interesting story. Ungaro sees his company’s jobs in much the same light that every business leader does, regardless of industry: develop a great product, create a following, and grow revenues. Creating the following has been the problem for pure-play HPC companies. The HPC market is very demanding, and acts swiftly to punish companies and technologies that fall behind (witness the rise, fall, and rise again of Intel on the Top500). Companies in HPC have to innovate continually, which creates a huge R&D burden.

Each year Cray spends about 30% of its gross revenues directly on R&D, and according to Ungaro over half of Cray’s employees are directly involved in research. Companies like IBM and HP can leverage other market segments to support that kind of cost burden, but pure play HPC companies cannot.

So the key question for Cray whether — even assuming a compelling product that customers will buy — the revenue large enough to support all the R&D it takes to stay competitive. Again, Ungaro says yes.

Ungaro puts Cray in a $3B segment of the roughly $10B total HPC market today. At $300M, the company has plenty of room to grow, and if you dive into the financial statements you’ll see that they are actually making money where they are today. Cray has been one of the few positioned to take advantage of a strong cash position going into the economic downturn to buy back all of its outstanding debt at a significant discount to book value, while maintaining its line of credit and about $65M in cash at the end of Q3’09. This means they have options: they can run the business out of cash on hand, or invest in the future and maintain an ability to service large orders by drawing on short term credit facilities.

In addition to its balance sheet strength, the company is putting cash into the checking account. Following a significant realignment of the company during the first several years of Ungaro’s turn in the captain’s chair, the company actually made “real” money in 2008, putting about $23M into the bank. I qualify that statement because Cray was forced to reduced stated earnings by $54.5M for goodwill impairment (that would be “fake” money) in a move that impacted the balance sheet, but not the checking account.

Still, the point about diversification my commenter made in his comment is a reasonable point. Most businesses diversify themselves to insulate earnings from one-time fiascos, slipped schedules, and the like. The supercomputing market — the very high end of HPC — is a hard business to be in technologically, and requires some very dedicated focus. This means either doing one thing, and doing it very well (Cray’s approach), or it means being big enough to focus on many things very intently (like IBM and Intel, for example).

In our discussion, though, Ungaro pointed to the company’s efforts to diversify into businesses that would help damp oscillations in the revenue stream while continuing to focus on the high end. This leads to a strategy of finding new downstream markets for work Cray is already doing. Enter the mini and custom engineering.

Diversification based on the high end

In the past 12 months Cray has introduced two new lines of hardware.

The first, Cray’s CX1 deskside HPC system, is a Cray in name only: Cray concentrates on the design and go-to-market aspects and leaves the rest to others.This makes the CX1 almost a branding exercise with very little downside for the company. A smart way to experiment with a new market.

The mini however, the system officially designated the XT5m, is all Cray. “The mini leverages our high-end R&D down to $0.5-2.0M systems buyers,” says Ungaro. “We are still innovating with this system, but in a different way. Mini buyers run much more ISV codes than our high end buyers, and so the work we do to facilitate that use on the XT5m will find its way up to the XT5 and improve the value for customers there in the same way that our architecture and system management innovations at the high end formed the basis of this machine.” How significant is XT5m business today? “There are a handful of systems around the world, but we look for that to grow significantly and become a double digit percentage of revenues in the future.”

Custom engineering, on the other hand, is a different story. The custom engineering business was announced by Cray back in April of this year, headed up by previous services head Chuck Morreale. The idea behind the business was simple: Cray has a lot of smart people who have solved incredibly challenging problems in bringing large scale supercomputers to market. Why couldn’t they sell those smarts to others as a service?

The idea has been well-received. “Custom engineering has grown to a $30+M business from $0 in just over one year,” according to Ungaro.

In the abstract this is essentially a bodyshop business, and bodyshops have notoriously low margins; there is always someone else willing to take a loss on a job “just this one time” to get the business. In order to avoid competing against that crowd, however, Cray has positioned its custom engineering team to take advantage of technology and competencies it has to develop in-house for itself anyway, and use those to drive new revenue. For example, Ungaro highlights the company’s ECOphlex cooling technology developed for its own high-end supers, and now being tweaked by custom engineering for a variety of different customer applications. Other growth areas for the team are data management and knowledge management, both areas that rely on the company’s high-end HPC business.

Ungaro hopes that the recipe for growing revenue as a high end HPC company without simultaneously ceasing to be a high end HPC company is to grow around the needs of the high-end market. “I don’t only think of us as a supercomputer company,” he says. “I think of us a supercomputing innovation company. If we can remove the barriers to people using Cray technology, we can continue to make gains in the market.”

Bailouts

Of the persistent undertone that the only reason the company continues to exist is thanks to the charity of three-letter agencies in the federal government, Ungaro says (almost wistfully) that just isn’t the case. “We are past the days when customers, any customers, were willing to buy a nameplate. High-end customers are very technical, and very logical. If our machines didn’t stand on their own technical merit, we just wouldn’t be successful. We might sell 3 systems, but not 30.”

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Tabor Research stands by positive HPC outlook in down economy

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Addison Snell at Tabor Research published an interesting read last week at the HPCwire blog.

With the economy beginning to crash down around us, Tabor Research issued a press release in October stating that the majority of users expected to increase their spending on HPC, with most of those expecting a significant increase. Three months later, we stand by that insight.

They aren’t the only ones saying that HPC is a lone bright spot in the otherwise dreary IT market. IT analysis firm Waters said in early January that HPC in finance would be strong in the near future. Another major, soon-to-be-released study predicts that while HPC sales may fall in the short run (a result of deferrals), they will still remain ahead of general IT spending and recover faster. Tabor predicts essentially the same thing.

2009 could therefore see a total decrease in HPC spending, not because users’ budgets are contracting, but mostly due to purchases being placed on hold for a time before they are finally approved. Occasionally, all purchases, whether budgeted or not, are suspended at an organizational level until a future date. Deals slip from this quarter to next quarter, and some eventually topple from 2009 to 2010. The good news is, when the economy eventually turns around (yes, please), sales cycles will shorten again, and we’ll see a positive blip as deals pull back in.

I certainly think this is true in supercomputing, where we have  thick layer of insulation between us and both good and bad times. The picture that Tabor Research and other are painting — longer sales cycles, but more delays than outright cancellation — seems reasonable to me.

For my money the companies that focus exclusively on HPC (SGI and Cray are the high end examples) have a “life on the hairy edge” business model, and we  have to be worried about these guys not being able to weather any storm, no matter how short. Based on recent debt buy backs and insider stock buys, Cray is betting it can. SGI hasn’t made any such public bets.

Sun, while far from a pure play HPC company, is hurting and may be bowled over by the dip in general IT. If I had to guess, I’d say HP and IBM will get over the hump, although it isn’t clear yet that HPC as a business within these companies will survive.  If it doesn’t it will be a religious decision rather than any kind of strong indicator about the viability or otherwise of HPC in this economy — I cannot imagine that HPC drives the bottom line or product decisions at either company in any significant way. Both are about 100 times bigger (in market cap) than the entire HPC market.

What about the Penguins, Rackables, Veraris, and Bulls of the world? They’ll have a harder time mixing it up over cost in the middle market with a less differentiated product or, worse, driving down to the bottom to compete solely over price. Some of these may cease to be, unless the recovery is very swift indeed.

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An update on Swift

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An abstract from a recent talk by Ian Foster in Germany on Swift (we covered Swift for the first time in March):

A common pattern in scientific computing involves the execution of many tasks that are coupled only in the sense that the output of one may be passed as input to one or more others–for example, as a file, or via a Web Services invocation. While such “loosely coupled” computations can involve large amounts of computation and communication, the concerns of the programmer tend to be different than in traditional high performance computing, being focused on management issues relating to the large numbers of datasets and tasks–and often, the complexities inherent in “messy” data organizations–rather than the optimization of interprocessor communication.

…To address these concerns, we have developed Swift, a system that combines a novel scripting language called SwiftScript with a powerful runtime system based on Karajan and Falkon to allow for the concise specification, and reliable and efficient execution, of large loosely coupled computations.

The post on Ian’s blog contains a pointer to the presentation.

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Swift

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Ian Foster points today to the unveiling of Swift:

We unveiled this week the first release of Swift, a system for the specification, execution, and management of applications comprising many tasks coupled by disk-resident datasets. Such applications are common when analyzing large quantities of data, performing parameter studies, and/or executing ensemble simulations.

The open source software includes a scripting language for tying everything together and an execution engine to get the work done.

Swift users in the physical, biological, and social sciences; the humanities; computer science; and education have achieved multiple-order-of-magnitude savings (!) in program development and execution time, relative to approaches based on shell scripts and other ad hoc technologies.


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