eugene@wilbur.nas.nasa.gov (Eugene N. Miya) (05/04/90)
Minor factoids:
The X-MP was introduced in 1982/3 (not 1984, a papers yes that year)
Ames got SN 103 I think, Hugh LaMaster probably knows the specific date.
I think Cray will still sell you a Cray-2. Just as your local Cray
salesman. ;)
--e. nobuo miya, NASA Ames Research Center, eugene@orville.nas.nasa.gov
{uunet,mailrus,other gateways}!ames!eugenemjt@duck.ncsc.org (Mike Tighe) (05/05/90)
In article <5944@amelia.nas.nasa.gov> eugene@wilbur.nas.nasa.gov (Eugene N. Miya) writes: >Minor factoids: >The X-MP was introduced in 1982/3 (not 1984, a papers yes that year) Minor correction: The CRAY X-MP2 was announced in April of 1982, and the CRAY X-MP4 was announced in July of 1984. -- Michael Tighe, mjt@ncsc.org (919)-248-1157
lamaster@ames.arc.nasa.gov (Hugh LaMaster) (05/08/90)
In article <5944@amelia.nas.nasa.gov> eugene@wilbur.nas.nasa.gov (Eugene N. Miya) writes: >Minor factoids: >The X-MP was introduced in 1982/3 (not 1984, a papers yes that year) >Ames got SN 103 I think, Hugh LaMaster probably knows the specific date. I don't remember which SN, though it was a very low number one. Was it the first X-MP/2X that went to Digital Productions, Inc, even before DoE got one? I seem to recall some DoE annoyance that one of Cray's machine went to another customer first... Anyway, it was October of 1983, according to my fallible long term memory. Hugh LaMaster, M/S 233-9, UUCP ames!lamaster NASA Ames Research Center ARPA lamaster@ames.arc.nasa.gov Moffett Field, CA 94035 Phone: (415)604-6117
ggarb@apple.com (Gordon Garb) (05/08/90)
In article <48880@ames.arc.nasa.gov> lamaster@ames.arc.nasa.gov (Hugh LaMaster) writes: > Miya) writes: > >Minor factoids: > >The X-MP was introduced in 1982/3 (not 1984, a papers yes that year) > >Ames got SN 103 I think, Hugh LaMaster probably knows the specific date. > > I don't remember which SN, though it was a very low number one. Was it the > first X-MP/2X that went to Digital Productions, Inc, even before DoE got one? > I seem to recall some DoE annoyance that one of Cray's machine went to > another customer first... Digital Productions was SUPPOSED to get the first X-MP in the field; we actually got serial number 108. We were supposedly first when we placed our order, but our financial situation (which was never very good) at the time of scheduled delivery for the X-MP was pretty lousy. We couldn't afford to buy the X-MP from Cray, so we asked them if they'd like to lease it to us instead. This was all towards the end of 1983, and Cray very much wanted cash sales (not leases) to make the year-end financials look good. Add to this the fact that DP was probably in behind on lease payments on our Cray 1 (s/n20) and on maintenance charges. Cray found another buyer for our machine while they renegotiated the financial terms of our eventual X-MP acquisition. We got an X-MP 22. We could probably have used more memory, and an SSD, but we couldn't afford them. I think Nasa Ames actually got the first X-MP in the field. Gordon Garb former Operations Manager, Digital Productions (* This disclaimer is closed for remodelling *)
ciotti@wilbur.nas.nasa.gov (Robert B. Ciotti) (05/09/90)
Hello There, The Ultimate Warrior <Marty Fouts> writes: >The problem with your assumption is that there is *no way* to make a >ten year development cycle followed by a five year product life time >pay off. It is even difficult to make it break even. Get out your >favorite spreadsheet and do this simple problem: > >1) 10 years of 100m/year R&D expense with no revenue. >2) 10%/year line of credit loan financing. >3) 5 years of 100% sales >4) 100% gross markup on sales, so that net revenues are 50% of > sales. > >You will find that to break even, the company will spend 1 billion >dollars on R&D, and 1.2 billion dollars on loan interest over those first >ten years. And then it will have to do 10 billion dollars in gross >sales per year for five years. And this is of course very optimistic, >because it doesn't take taxes or capital depreciation into account, >let alone indirect cost of doing business. DON'T forget those golden parachutes (:^{) I don't get the same numbers, but thats probably because I'm using the wrong base :). My accounting is rough but here goes... using yearly interest compounding, 100m for 10 years @10% future value annuity at year 10 is 1.593 billion year 15 value at 2.566 billion the 5 year annuity required to generate a future value of 2.566 billion is 420 million/year so, 420 million in net revenue/year to break even for 5 years with cost at 50% of product asking, thats 841 million gross/year over five years. (a lot of pipers) considerably off of the 10 billion. And with the 50million/year that Rob Peglar claimed ETA was funded at, it works out to 420 million gross/year revenue for an ETAism (still a lot of pipers;) As noted, this leaves out a lot. If you look at the past few years at CDC, losses aren't important, but their magnitudes are, hell it took a billion dollar loss in the disk drive industry to convince them to get out of the low end drive business. I think CDC would have been happy to break even on ETAs first child, be it a bit retarded (I feel flames already), but the bankers were another story. The scuttle I heard was that if CDC did not show profit by 2nd quarter 89, the already wary bankers (CDC had technically defaulted on loans recently and it seemed to really upset those guys), would come in and make some hard decisions for CDC management if they did not do something aggressive to re-align cash flows. Aggressive they were, with a sharp sword, severed a limb that could probably have been saved (ever have a fear of being taken to the wrong hospital?) . Another bit of interesting scuttle, which is in my opinion is a serious tax law problem, was the reason that CDC scuttled ETA is that the tax write-off for loss was much more financially attractive than selling. So the closing and not selling of ETA was really just a financially based decision and not a vendetta. ETA was certainly a promising mini-super machine, showing respectable performance, but in the super market, it was not quite up to the competition. But, are we comparing apples to oranges when you look at price/performance... Bob ciotti@orville.nas.nasa.gov This post does not represent the position of Control Data Corporation, ETA Systems, NASA, the Federal Government, or necessarily fact.
fouts@bozeman.ingr.com (Martin Fouts) (05/09/90)
In article <202@csinc.UUCP> rpeglar@csinc.UUCP (Rob Peglar) writes: From: rpeglar@csinc.UUCP (Rob Peglar) In article <253@garth.UUCP>, fouts@bozeman.ingr.com (Martin Fouts) writes: > Let me clarify my position. I never meant 20% starting at the end of > the first year. That's why the word "reasonable" in the quote. I > would debate the assertion that other countries investors are willing > to take an 8-10% ROI on a mature company after a large investment. > This is certainly not the Japanese approach. The Japanese are willing > to go negative for a long time, but expect a large ROI for a long time > afterwards. They are interested in owning large market share. [Rob points out that Japan is willing to take smaller ROI than the US because the cost of capital is lower. I have to agree:] Right. With a 3% savings account rate, cost of capital must be very low compared to the US, so 10% ROI is still acceptable. This doesn't impact my analysis below however. > > [ My spread sheet experiment showing that 100m/y R&D over 10 > years with 10% financing followed by 5 years of good sales > at 1x markup results in 1b in expenses and an immediate > need to generate 100b per year of business just to break even > deleted. ] You're starting to see my point. The supercomputer business is sufficiently different that starting from scratch - a la ETA - cannot cope with your four constraints above. There has to be something else, an external force, to influence this. In ETA's case, 1) was more like $50 million/year. 2) was the real problem. CDC's bankers wouldn't do it. ETA's failure to be *taken public* - in other words, let the market fund you, not the banks - killed them. 3) was beginning to be reality. In early 1989, ETA was sold out of air-cooleds - they were backordered. Couldn't build 'em fast enough. Very reasonable projections showed that ETA could sell close to 100 air-cooleds in 1989, if only they could build them that fast. 4) is wrong, at least in the way I read your words. The markup necessary over cost has to be more like 4-5x for viability, 6x for good profits; not 1x like you say. For instance, the cost to build an ETA-10 CPU was (*ballpark*) $250,000. The incremental revenue from each CPU (i.e., price charged, list) was (again, ballpark) $1,000,000. That's 4x. It should have been more like 6x, i.e. $1,500,000 per CPU. However, there is and was a market perception about 1.5 million dollars; many entities (firms, universities) would spent 1.0 million, but swallowed hard at 1.5 million. No. I'm starting to refute your point. I put a 1x markup in to avoid people saying it has to be smaller. If you demand a larger markup, you need a larger share of the market to make it. The point of the exercise was to demonstrate that with the product development cycle you are describing it is not possible to make money. If you increase the markup (as you properly should to account for taxes and other overhead that I didn't describe) you need an even larger share of the market just to break even. You are seriously impeded by the short product life time of your product. Go back and do the analysis on ETA. By the time the air cooled machine was obsolete it would not have recovered half of the R&D cost.... I don't think going public would have helped, but that is harder to call. The stock market isn't really a way to finance a startup company, as the market tends to respond to the current value of the company, rather than its potential. Given the market climate at the time, a poorly received IPO might have killed ETA faster than the bankers did, but since history doesn't record alternatives, the best we can do is speculate. I think that CRI's biggest problem right now is that CRI management is too concerned with what wall street thinks. In ten years, I never saw as many CRI managers interviewed in technical rags as I've seen CRI financial interviews in the last six months. I bet the bottom line kills that company in about five to ten more years. [ Another good argument for lower cost financing in Japan deleted.] Fortunately, there are two (that I can see) ways out. One is happening now, grossly stated as the *attack of the killer micros*. I.e., use commodity parts in ingenious ways. Far less R&D cost and less time to market than "traditional" supercomputing. The other way is the path of least resistance - just decide to allow others to make/sell these machines. Go with the flow. I agree. Please note that the killer micros are a strong argument against the "old" supercomputer industry, as they are taking their performance techniques from old mainframe technology and not from supercomputer technology.... The vector unit will probably die out with the Cray (;-) > > However, the life cycle of the machines was unlikely to be long enough > to ever recover the entire cost of those first six years, let alone > make a profit. True again, if you think R&D stops. See below. > > I hope the readers are smart enough to realize that it doesn't make > sense to develop a product whose R&D time is twice its likely market > viability. (For those readers who don't believe the 5 year life > cycle, consider that CRI introduced the Cray X/MP in 1984 and the Cray > 2 in 1985. The 2 is no longer sold, and the X/MP is being replaced by > the Y/MP in the market place.) Bingo. Your profits, hopefully, are enough to carry your R&D through into the next cycle. This is why the funding for startups is a critical issue. Once "kick-started", vendors can survive. CRI is the perfect example - although, in many ways, CRI is at a crucial point in their company history. Nope. Your technology is obsolete. You don't get to carry any of the R&D over. If it wasn't obsolete, you would still be using it. You might get to take 8 years next time instead of 10 because you've finally developed a team with the necessary experience, but the history of the computer industry is even against that, since very few people stay with a project for 10 years and almost noone stays with it for 18. You are also carrying the cost burden. > The trick is to do the R&D cheaply enough or fast enough that the > product has a long enough market life time to recover costs and make > money. If you can't do that, you shouldn't be in business. True. The point is to let the market, not the bankers, decide. We agree here. I only claim that there just isn't any market for products whose R&D cycle is twice their life cycle. -- Rob Peglar Control Systems, Inc. 2675 Patton Rd., St. Paul MN 55113 ...uunet!csinc!rpeglar 612-631-7800 The posting above does not necessarily represent the policies of my employer. -- Martin Fouts UUCP: ...!pyramid!garth!fouts ARPA: apd!fouts@ingr.com PHONE: (415) 852-2310 FAX: (415) 856-9224 MAIL: 2400 Geng Road, Palo Alto, CA, 94303 If you can find an opinion in my posting, please let me know. I don't have opinions, only misconceptions.
fouts@bozeman.ingr.com (Martin Fouts) (05/09/90)
In article <13881@dime.cs.umass.edu> yodaiken@freal.cs.umass.edu (victor yodaiken) writes: From: yodaiken@freal.cs.umass.edu (victor yodaiken) In article <202@csinc.UUCP> rpeglar@csinc.UUCP (Rob Peglar) writes: >In article <253@garth.UUCP>, fouts@bozeman.ingr.com (Martin Fouts) writes: >> The trick is to do the R&D cheaply enough or fast enough that the >> product has a long enough market life time to recover costs and make >> money. If you can't do that, you shouldn't be in business. > >True. The point is to let the market, not the bankers, decide. >-- My bad experience with a start-up fold-down did not lead me to great confidence in the market either. Investors seem interested in quick profits, and too technically ignorant to make good decisions. Tranistors were a poor draw in the market until many years of DOD funding developed both the technology and the applications to a point where manufacturing became cheaper. Note the niether the Japanese nor the Europeans are willing to wait for markets to be developed and controlled by someone else before getting into a field. They are quite happy to let the government force and entice corporations into areas that they think are good for the nation --profitable or not. According to a book on Bell Labs that I have been reading lately this is another urban myth. Acording to the book, DOD did very little to fund transistor work. There were two problems with marketing transistors. One was reliability and the other was acceptance. Once the reliability problems were solved, A major effort was needed to convince engineers to design with transistors, and to find products where they were truely useful... In fact, on careful investigation, one can find very little technology developed as a result of government research which actually achieved commercial acceptance. I've been trying for enough years that I now assert that no US government funding has had sufficient impact on a consumer technology to pay for itself, or introduce a significant impact on the market. Before you all flame me about the early history of computers, go back and carefully compare the relationship of the the military projects like eniac to the commercial work done by companies like sperry and ncr. You will be surprised at how little impact removing the government from the computer industry would have really had. BTW, the big win for transistors was cheap pocket radios. Twenty years later the big win for ICs was cheap radios. US industry missed both of these obvious markets. -- Martin Fouts UUCP: ...!pyramid!garth!fouts ARPA: apd!fouts@ingr.com PHONE: (415) 852-2310 FAX: (415) 856-9224 MAIL: 2400 Geng Road, Palo Alto, CA, 94303 If you can find an opinion in my posting, please let me know. I don't have opinions, only misconceptions.
rpeglar@csinc.UUCP (Rob Peglar) (05/09/90)
Marty has written good postings pointing out the difficulties about starting/operating/maintaining a "supercomputer business" (I'm starting to wonder just what that phrase means, however :-)) He points out the seemingly iron-clad assumption that if your product (a supercomputer, say) has a life cycle of n years, having an R&D cycle of n*2 years is fiscally impossible, and (more or less) points to ETA as an example. First, I won't get into the business of predicting life cycle, either in terms of costs or product longevity. Either is a crap shoot, as witnessed by many real examples. I can think of MS/DOS, the IBM 370 architecture, and the CDC 6600 as examples of product which have had unusually long product lifetimes for mysterious reasons. Point here is that Marty's conclusion that the product life of the ETA-10 is four years cannot be drawn de jure, reasonable as it may be de facto. Second, although I agree in principle with the above n vs. n*2 assumption, one of my points in postings before was that this applies only to the first product (viz. the Cray-1). The second product has, more likely, (using x here) of n/2<x<n years, because one learns from their mistakes (viz. the Cray-2 vs. Cray-1, Y-MP vs. X-MP). The third and fourth, hopefully, fit into an n/4<x<n/2 scenario (viz. the IBM 370 extensions upon extensions to the basic architecture). Supercomputer startups, like ETA was, may well fall into the n<x<n*2 range for the first product. This is all the more reason to have external forces at work (government, etc.) during this phase to help with the ever-present fiscal issues. That is, if we as a society place value on supercomputer startups. I am unsure myself, now, after experiencing ETA first-hand. Marty, you're lucky you never took that offer. No :-). Rob
fouts@bozeman.ingr.com (Martin Fouts) (05/10/90)
In article <5944@amelia.nas.nasa.gov> eugene@wilbur.nas.nasa.gov (Eugene N. Miya) writes:
Minor factoids:
The X-MP was introduced in 1982/3 (not 1984, a papers yes that year)
Ames got SN 103 I think, Hugh LaMaster probably knows the specific date.
Ames got SN103 in early 1984. I was site manager of the other computer
facility at the time and coordinated the installation. The X-MP was
first discussed by CRI in 82, but it was late. My defintion was for
first ship, not first vapor (;-)
I think Cray will still sell you a Cray-2. Just as your local Cray
salesman. ;)
Nope. Part of the deal with the spin off is that any Cray-2 machines
which weren't already in negotiation have to be sold by Cray Computer
rather than Cray Research. If you go to CRI they'll try to change
your mind to a Y/MP. If you go to Cray Computer, you may have trouble
finding a salesman, since they are still ramping up their staffing...
--e. nobuo miya, NASA Ames Research Center, eugene@orville.nas.nasa.gov
{uunet,mailrus,other gateways}!ames!eugene
--
Martin Fouts
UUCP: ...!pyramid!garth!fouts ARPA: apd!fouts@ingr.com
PHONE: (415) 852-2310 FAX: (415) 856-9224
MAIL: 2400 Geng Road, Palo Alto, CA, 94303
If you can find an opinion in my posting, please let me know.
I don't have opinions, only misconceptions.art@cs.bu.edu (Al Thompson) (05/10/90)
In article <301@garth.UUCP> fouts@bozeman.ingr.com (Martin Fouts) writes: [...] | |According to a book on Bell Labs that I have been reading lately this |is another urban myth. Acording to the book, DOD did very little to fund |transistor work. There were two problems with marketing transistors. |One was reliability and the other was acceptance. Once the |reliability problems were solved, A major effort was needed to |convince engineers to design with transistors, and to find products |where they were truely useful... Well, this is sort of right and sort of wrong. It's true that Uncle did not directly fund the development of the transistor. But, it was the needs of NASA for low weight, low power devices that drove the development. The gov't was willing to pay any price for these devices, and so they purchased them when they were so expensive no private consumer could afford them. The result was that manufacturing techniques were improved to the point where the unit price fell to acceptable consumer levels. | |In fact, on careful investigation, one can find very little technology |developed as a result of government research which actually achieved |commercial acceptance. I've been trying for enough years that I now |assert that no US government funding has had sufficient impact on a |consumer technology to pay for itself, or introduce a significant |impact on the market. Try the flat rivet technology Boeing uses on its new generation of airliners, the Connection Machine, Sun Microsystems, most medical research, duct tape, etc. | |Before you all flame me about the early history of computers, go back |and carefully compare the relationship of the the military projects |like eniac to the commercial work done by companies like sperry and |ncr. You will be surprised at how little impact removing the |government from the computer industry would have really had. I'm not so sure. Just who bought most of the original computers? Uncle of course. That single customer market had a big impact whether or not they were directly involved. Don't forget the ARPA net. It's very common for the gov't to fund things indirectly by being a big (sometimes only) early customer. The Connection Machine is a case in point. It's early support from DARPA (purchase of machines before design completion and funding a large percentage of the early purchases) made it a viable product. | |BTW, the big win for transistors was cheap pocket radios. Twenty |years later the big win for ICs was cheap radios. US industry missed |both of these obvious markets. The first transistor radio was the Regency which appeared just before Christmas 1954. The radio was actually built by TI and marketed by Regency. It was a huge success. That others picked it up and ran with it in no way diminishes the contribution of TI.