Silicon Graphics has always been a technology leader. Since our founding over a decade ago, we've applied our visual computing expertise to serve the needs of a highly technical marketplace. Traditionally, customers have turned to Silicon Graphics products to solve visual computing problems in technical, scientific and entertainment applications such as molecular modeling, flight simulation, earth sciences, film special effects, and computer- aided design, to name just a few examples.
None of that has changed. What is different, however, is the sheer number of people now using Silicon Graphics technology. While we remain entrenched as the visual computing leader with our historical customer base, many more people are now beginning to appreciate the benefits our products offer. Part of that is because our technology has become increasingly affordable with each passing year. And part of that is because the world in general is moving closer to the kind of visually oriented, interactive computing that Silicon Graphics products provide.
By any measure, technology is becoming more accessible and intuitive to use. The world is on the threshold of an age of interactive, multimedia computingwhich, after so much hype, is beginning to become a reality. As that reality penetrates the lives of everyday people, Silicon Graphics is leading the way in building the bridge between the worlds of logic and emotion, serving as one of the principal architects of computings human touch.
As time has borne out, Indigo was a significant milestone--the first in a wave of affordable, "low-end" desktop visual computing solutions that have changed the model of Silicon Graphics business. With the fiscal 1994 introduction of Indy, a powerful desktop digital workstation with an array of graphics, video and audio capabilities, we upped the performance ante while lowering the price of entry. Today, Silicon Graphics now offers more than a dozen different Indigo and Indy family members at a variety of price/performance points, swelling the ranks of our desktop computer products.
These products have been enthusiastically received by the market. As a result, just over 60% of Silicon Graphic's product revenues in fiscal 1994 were derived from sales of our desk-top systems. And just as our business is changing, so too are the ways in which our products are being used. In the past, many of our technical customers may have been content to rely on a single, high-end Silicon Graphics computer for comprehensive 3D graphics application development work. Today, however, cost efficiencies have enabled many of those same customers to deploy networked Indigo or Indy computers across their entire staffs of engineers, scientists and creative professionals.
Indy is a desktop workstation for cost-conscious technical users which combines the elements of interactive media, high-performance computing and workgroup collaboration. Armed with a digital color video camera, state-of-the-art desktop graphics, CD-quality audio, ISDN capabilities and a microphone, Indy represents a new way of gathering, processing, and presenting data from a variety of media.
During fiscal 1994, Silicon Graphics introduced several price/performance versions of Indy, along with two new Indigo family members-the Indigo2 XL and Indigo2 XZ-that help round out our desktop computer product line. We also introduced Indigo Magic, a powerful and intuitive user interface that lowers learning curves and raises productivity. Its fully customizable environment includes an extensive collection of media tools that are compatible with all Silicon Graphics computing platforms.
During fiscal 1994, for example, our CHALLENGE series of server solutions set several open systems database transaction-per-second (TPS) performance records while running Oracle relational database management systems in a client/server configuration. The CHALLENGE server products can handle the fast transaction processing requirements of traditional databases, as well as the increased demands of the more complex databases of the 1990s that manage multimedia or visual data.
The POWER CHALLENGE, which began to ship at the close of fiscal 1994, builds on Silicon Graphics years of experience in symmetric multiprocessing to deliver gigaFLOPS (billions of FLoating-point Operations Per Second) of computing performance for a fraction of the cost associated with traditional vector supercomputers.
Silicon Graphics' network of distributors and partners also continues to grow. During the year we announced a strategic alliance with EDS, an established leader in the commercial systems integration marketplace. EDS will distribute and support the dbINTELLECT(TM) product line, which incorporates our CHALLENGE servers to dramatically reduce the processing time it takes to capture, combine and manage networked information. In addition, we announced an agreement under which Tandem Computers Incorporated will distribute our CHALLENGE servers and Indigo product family to the commercial marketplace.
MIPS continues to set the pace in RISC microprocessor technology. First and foremost among its accomplishments was the introduction of the R8000, the worlds fastest commercially available supercomputing microprocessor. As the first superscalar implementation of the MIPS architecture, the 64-bit R8000 chip set offers superior performance on applications traditionally reserved for large, expensive supercomputers. The R8000 is the processor at the heart of Silicon Graphics' new POWER CHALLENGE supercomputers, which we believe will reshape the contours of the supercomputing landscape. MIPS also introduced a powerful new 200-MHz version of the 64-bit R4400, which significantly outperforms Pentium(TM) for servers and desktops in the UNIX and Windows NT(TM) operating system markets. And the new MIPS R4600(TM) microprocessor has enabled Silicon Graphics to double the speed of our entry-level Indy's application performance while improving Indy's original competitive pricing.
While MIPS microprocessors can be found in all Silicon Graphics computers, they also are expanding their reach as the processor of choice in a host of products from other leading original equipment manufacturers. During fiscal 1994, MIPS began shipping the 80-MHz R4200 microprocessor, which offers Pentium class performance for a fraction of Pentiums price and power dissipation in desktop and notebook computer designs.
In much the same way that the military historically spurred many of the advances in computer science that have since migrated to widespread commercial applications, the entertainment industry is currently acting as the leading driver of interactive technology. Silicon Graphics with its legacy of leadership in visual computing, a natural forerunner of today's multimedia applications has been extremely active in forging alliances with entertainment industry leaders to advance the state of interactive computing.
During fiscal 1994, Silicon Graphics and Nintendo, the world leader in video games, joined forces to create a truly three-dimensional 64-bit Nintendo machine for home use. Nintendos Ultra 64 is the first application of Reality Immersion Technology, a new generation of video entertainment that enables players to step inside real- time, three-dimensional worlds. Silicon Graphics also teamed with the Walt Disney Company to provide the technology behind the Walt Disney Imagineering Labs at Epcot Center a virtual reality experience that enables people to view, interact and actually fly through scenes from Disney's award-winning, full-length animated film, Aladdin.
These agreements follow closely on the heels of two significant alliances Silicon Graphics entered into near the end of fiscal 1993. In partnership with Industrial Light & Magic (ILM), a division of Lucas Digital Ltd. and the worlds most renowned visual special effects facility, we announced the creation of JEDI (the Joint Environment for Digital Imaging). JEDI is one of the largest and most advanced production environments for the creation of digital imagery in the entertainment industry. In addition, Silicon Graphics and Time Warner Cable are developing technology for a full-service interactive digital cable television network. Scheduled to begin deployment into 4,000 Florida homes by the end of calendar 1994, the technology will vastly expand information and entertainment choices for consumers, providing access to such services as video-on-demand, educational resources, interactive video games and home shopping.
We also entered into significant interactive technology agreements during fiscal 1994 with two of the world's leading telecommunications companies, Nippon Telegraph and Telephone Corporation (NTT) and AT&T Corp. The NTT letter of intent provides for Silicon Graphics and NTT to collaborate in testing interactive digital networks. The arrangement gives Silicon Graphics the opportunity to play a key role in helping to establish the architecture for the information superhighway in Japan and to supply media servers for NTT's trials and subsequent deployment. The AT&T agreement resulted in the formation of Interactive Digital Solutions, a joint venture between Silicon Graphics and AT&T created to develop and deliver large- scale, fully integrated, interactive video solutions for telephone company networks and cable TV systems.
All of these alliances point toward a promising future for Silicon Graphics as a pioneer in the interactive technology arena. That future builds on a past during which we established the Company as the world's leading provider of visual computing solutions. Today, the combination of our advanced supercomputers and servers, our wide- ranging Indigo and Indy desktop workstations, our networking and application development software, and our resident microprocessor development capabilities place Silicon Graphics in a leadership position in the markets we serve.
Tomorrow, we hope to extend these capabilities to make interactive computing a reality that touches the lives of all people. We hope to help bridge the gap between computer logic and human emotion, and realize the full potential of information technology. Even in a highly scientific age, it is the human touch that ultimately will turn computers into a tool that everyone can use, for everyday uses. That is the challenge facing Silicon Graphics in the years ahead. And that is a challenge we gladly accept, as we stand on the threshold of the Interactive Age.
