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HPE to Acquire Cray for $1.3 Billion

Today HPE announced that the company has entered into a definitive agreement to acquire Cray for approximately $1.3 billion.

This pending deal will bring together HPE, the global HPC market leader, and Cray, whose Shasta architecture is under contract to power America’s two fastest supercomputers in 2021,” said Steve Conway from Hyperion Research. “The Cray addition will boost HPE’s ability to pursue high-end procurements and will speed the combined company’s development of next-generation technologies that will benefit HPC and AI-machine learning customers at all price points. Cray will benefit from joining a company with greater resources and much more experience in commercial markets that are increasingly adopting HPC technology to accelerate R&D and business operations.”

The Explosion of Data is Driving Strong HPC Growth

The explosion of data from artificial intelligence, machine learning, and big data analytics and evolving customer needs for data-intensive workloads are driving a significant expansion in HPC.

Over the next three years the HPC segment of the market and associated storage and services is expected to grow from approximately $28 billion in 2018 to approximately $35 billion in 2021, a compound annual growth rate of approximately 9 percent. Exascale is a growing segment of overall HPC opportunities and more than $4 billion of Exascale opportunities are expected to be awarded over the next five years.

Addressing complex challenges and advancing critical academic research, including predicting future weather patterns, delivering breakthrough medical discoveries, and preventing cyber-attacks, requires significant computational capabilities, up to and through Exascale level architecture. Exascale capable systems enable solutions to these problems with much greater precision and insight.

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,” said Peter Ungaro, President and CEO of Cray. “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.”

Cray is a Leading Innovator in Supercomputer Solutions

Cray is the premier provider of high-end supercomputing solutions that address customers’ most challenging, data-intensive workloads for making critical decisions. Cray has a leadership position in the top 100 supercomputer installations around the globe. With a history tying back to Cray Research, which was founded in 1972, Cray is headquartered in Seattle, Washington, with US-based manufacturing, and approximately 1,300 employees worldwide. The company delivered revenue of $456 million in its most recent fiscal year, up 16 percent year over year.

Cray’s supercomputing systems, delivered through their current generation XC and CS platforms, and next-generation Shasta series platform, have the ability to handle massive data sets, converged modeling, simulation, AI, and analytics workloads. In addition to supercomputers, they offer high-performance storage, low-latency high performance HPC interconnects, a full HPC system software stack and programming environment, data analytics, and AI solutions – all currently delivered through integrated systems.

Cray recently announced an Exascale supercomputer contract for over $600 million for the U.S. Department of Energy’s Oak Ridge National Laboratory. The system, which is targeted to be the world’s fastest system, will enable ground-breaking research and AI at unprecedented scale, using Cray’s new Shasta system architecture and Slingshot interconnect. The company was also part of an award with Intel for the first U.S. Exascale contract from the U.S. Department of Energy’s Argonne National Laboratory, with Cray’s portion of the contract valued at over $100 million.

Cray Strengthens and Expands HPE’s High Performance Computing Portfolio

High performance computing is a key component of HPE’s vision and growth strategy and the company currently offers world-class HPC solutions, including HPE Apollo and SGI, to customers worldwide. This portfolio will be further strengthened by leveraging Cray’s foundational technologies and adding complementary solutions. The combined company will also reach a broader set of end markets, offering enterprise, academic and government customers a broad range of solutions and deep expertise to solve their most complex problems. Together, HPE and Cray will have enhanced opportunities for growth and the integrated platform, scale and resources to lead the Exascale era of high performance computing.

The combination of HPE and Cray is expected to deliver significant customer benefits including:

  • 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

Significant Economic Upside Expected to be Realized from the Combination

Bringing together HPE and Cray enables an enhanced financial profile for the combined company that includes several revenue growth opportunities and cost synergies.

The companies expect the combination to drive significant revenue growth opportunities by:

  • Capitalizing on the growing HPC segment of the market and Exascale opportunities
  • Enhancing HPE’s customer base with a complementary footprint in federal business and academia and the company’s ability to accelerate commercial supercomputing adoption
  • Introducing new offerings in AI / ML and HPC-as-a-service with HPE GreenLake

We also expect to deliver significant cost synergies through efficiencies and by leveraging proprietary Cray technology, like the Slingshot interconnect, to lower costs and improve product performance.

The transaction is expected to close by the first quarter of HPE’s fiscal year 2020, subject to regulatory approvals and other customary closing conditions.

In this podcast, HPE CEO Antonia Niri discusses the company’s plans to acquire Cray.

Download the MP3

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Comments

  1. Sparticus414 says:

    Not a win for cray customers. Seems like HPE is where HPC goes to die. Can’t wait to see how lustre gets destroyed just because HPE needs an interconnect and don’t have the expertise to make one so they buy a company.

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