Paradoxically, McCracken's cautious business philosophy allows SGI to make big bets in technology. He forbids managers from planning products more than two years ahead. ``Nobody's smart enough to plan long-term in this industry,'' he says. Instead, SGI rams through product cycles as fast as possible--12 to 18 months--so the latest technology can be incorporated. If the Indy workstation design had started just three months earlier than it did, he says, it couldn't have included a new digital camera.
Remarkably soft-spoken--with a voice "like he's telling a bedtime story," says one manager--McCracken has replaced former Apple CEO John Sculley as Silicon Valley's man in Washington. A lifelong Republican, he became a Clinton booster because of the Democrat's technology policies. Friends say McCracken is much less button-down than he looks. He has, for example, taken Silicon Valley's casual atmosphere far beyond Friday afternoon beer bashes. Two years ago, when two divisions were split into five, employees staged a wake, including a New Orleans band and cardboard coffins. Another SGI institution: an annual lip-sync competition that takes The Gong Show to new lows.
SGI puts its own aggressive twist on Valley ways: While other companies hold aerobics programs, SGI employees take karate and form bungee-jumping groups. That's not because they're young. In fact, the average age is 36--old enough by Valley standards to cause McCracken's 25-year-old son to hesitate before taking a job there. The company barely controls chaos--offices may move three times a year--but people seem to thrive on it: The 10% annual turnover rate is about a third of the Valley average.
It's not going to be so easy keeping that culture charging forward. As SGI reaches $1.5 billion in sales--and as up to 1,500 new people join next fiscal year--some former employees say political cliques are developing, and current staffers openly complain of burnout. Such problems may be starting to infect SGI's product development and customer relations. One former engineer says product cycles on workstations have stretched from as short as a year in 1988 to more than two years on the next generation. McCracken says cycles are only a little longer, and that's because products are more complex.
A bigger problem could be arrogance--the disease that nipped Apple. Mark Malmberg, president of Xaos Inc., a San Francisco video-production studio, says SGI people told him he would be foolish to consider using competitive machines from Kubota Pacific Computer Inc. or HP. And Lawrence J. Ellison, CEO of software giant Oracle Corp., says an SGI marketing exec berated him for not producing a piece of software, exclaiming, "You must be stupid!"
McCracken acknowledges that some employees are "prima donnas." But he relies on a cadre of a dozen top engineers, including five remaining co-founders, to keep SGI on track by searching out problems--technological and cultural. And most customers are still enthusiastic. Brad deGraf, director of digital media at video producer Colossal Pictures Inc., thinks SGI is the one alternative to Microsoft Corp. that can set a new agenda for the industry. "Microsoft is the Evil Empire," he says. "No one would ever say that about SGI."
SGI faces more daunting challenges than cultural turmoil. For one thing, rivals keep trying--so far unsuccessfully--to take away SGI's lead in graphics. In May, HP introduced 3-D workstations that match SGI's performance in mechanical design applications. And on July 12, Sun will again take aim at SGI with new models. Even PC makers may get in on the act: In April, 3DLabs Inc. in San Jose announced a $150 graphics accelerator chip that it claims will bring SGI-level graphics to PCs.
SGI isn't ignoring PCs completely. Microsoft plans to offer SGI's Graphics Library software in Daytona, the next version of Windows NT. But McCracken says it isn't worth trying to bring SGI's graphics directly to mainstream PCs, which he views as tired, hopelessly limited, and not very profitable.
Eventually, though, competition could force SGI to drop prices faster--or face getting left out of the mainstream. Warns Robert G. Pearson, director of Sun's advanced systems and a former marketing manager for SGI: "Apple had hot products, but then the volume standard [IBM-style PCs] eventually won."
Even if SGI doesn't broaden its appeal, it still has plenty of room to grow. But McCracken is determined to push beyond his niche markets. That's why he keeps prowling the Info Highway: He figures that if he can get others to back SGI's approach, he'll have it made.
Some rivals wonder if SGI's Lamborghini technology is too exotic for the Info Highway. Says James D. Olson, general manager for HP's Video Communications Div.: "It's like trying to sell school buses into the minivan market."
For now, however, there's little downside to the consumer push. SGI is not manufacturing any consumer devices, and both Nintendo and Time Warner are paying for the R&D on their projects. Even if the Time Warner deal doesn't pan out, SGI will have pushed its chip designs, networking, and user interface in directions that could make its workstations far more appealing.
The bigger risk may be keeping the company on track. SGI has little experience in consumer markets or in managing a high-volume business. Already, concedes Chief Operating Officer Thomas A. Jermoluk, "the company is bigger than anything any of us has ever run."
At this point, the company seems up to the task. Last fall, for instance, SGI proved it could still move quickly to avoid a major market blunder. When it realized a new version of its operating system was causing some programs to run like snails, Silicon Graphics stopped shipping machines for six weeks and mobilized hundreds of engineers to fix the glitches. Thanks to the quick action, it managed to post a record quarter.
That ability to turn on a dime may prove SGI's most potent weapon in years to come. Now, if it just doesn't go too Hollywood, SGI may well show the world the future of computing--in living 3-D color, of course.