The purchase of SGI, although not yet a certainty, is a very good move for Rackable Systems. It gives them a great entrée into the HPC market and instant credibility with customers, plus access to those customers. And the price is certainly right.

Those customer relationships, in fact, are one of the crown jewels of SGI. The other? SGI’s intellectual property. In the tech industry, we think of intellectual property as the “secret sauce” in a company’s hardware or software. And sure, SGI’s got some secret sauce. But their greatest value is in their people. SGI’s employees have worked with customers to solve huge, computationally intensive problems and are experienced in all facets of HPC computing.

Rackable should have a bigger piece of the HPC space; it’s a market that’s more than interested in systems with Rackable’s high compute density per square foot and delivery of cycle at a low cost. This market also buys systems on a scale that compares favorably to Rackable’s web 2.0 customer base. Rackable has credibility in the high-density/large server count web 2.0 space but a relatively small customer list, and a relatively small universe of customers who need systems at this scale. Also, they have been successful enough to draw the attention of IBM and HP – who both find this market attractive. HPC is a great market for Rackable because it will allow them to diversify away from relying solely on web 2.0 buyers. What Rackable doesn’t have is the market credibility and intellectual horsepower to be seen as a competitive player in the HPC market. If Rackable executes this transaction correctly by holding on to the important people and pieces of SGI, it will go a long way towards making them a player in HPC. This will pay benefits down the road as HPC-style computing continues to make its way into commercial businesses.

More analysis from the keen eye of our pal Timothy Prickett Morgan at The Register available here.