UBS Securities vice-president Marc Schulman reckons that at $406m – rather less after the share price took a dive on suggestions like his – Silicon Graphics Inc is paying dearly for MIPS Computer Systems Inc. According to Schulman, Silicon Graphics’s terms indicate it placed a higher value on MIPS revenues (a mere $169m in calendar 1991) than the market put on Silicon Graphics’s. The question for him then becomes why? Obviously the answer is Silicon Graphics’s complete dependence on the MIPS chip for all its products. But coming only three weeks after Digital Equipment Corp’s Alpha RISC announcement, the news leads Schulman to believe that Alpha – and the implicit migration of MIPS minority owners DEC and Kubota Computer Co from MIPS to Alpha – made the Silicon Graphics-MIPS deal imperative. (Silicon Graphics admits Alpha was stimulating.) Silicon Graphics faced the alternative, he thinks, of either buying MIPS or adopting Alpha. (Interestingly enough, other sources have claimed that Silicon Graphics talked to DEC about Alpha as, they say, has Data General Corp, Motorola Inc’s account). Schulman reckons that Silicon Graphics’s move on MIPS is very probably the death of the Advanced Computing Environment initiative – and this from the author of ‘ACE – The Winning Hand’ less than a year ago. In his view MIPS has been one of the few companies to play the open systems game fairly. It was never the first company to introduce a product based on its own technology. Instead that role was filled by Silicon Graphics. The industry will doubtless have trouble believing all that’s going to change now. Meantime last week’s Electronic News suggested that Control Data Corp is rethinking its dependence on the MIPS R-series, despite the fact that it has a hand in the design of some of the parts in the family. The suggestion seems a little strange, because in Dean Ascherson’s celebrated words about Britain, Control Data has lost an empire and not yet discovered a new role, so that a merger with the combined MIPS-Silicon Graphics company would give the latter critical mass without discomfiting interested third parties any more than the present proposed merger.
