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Published: August 12th, 2016

Hewlett Packard Enterprise (HPE) has struck an acquisition deal that could boost its presence in the high-performance computing (HPC) and big data analytics markets. The vendor signed a definitive agreement to acquire SGI for approximately US$275 million.

The acquisition could benefit HPE’s HPC-focused partners in the future, as the purchase will add SGI’s product lines to the HPE portfolio. It also seems safe to speculate the acquisition could spur future research and development initiatives in what IDC estimates to be a US$11 billion market. According to IDC’s “Worldwide HPC Server Forecast, 2016 – 2020” report, the HPC market is estimated to grow between six and eight percent annually over the next three years.

Silicon Graphics Inc., known for its HPC hardware and software products, ran into hard times a few years ago and filed for Chapter 11 bankruptcy protection in 2009. Many of its assets were sold to Rackable Systems, which renamed itself Silicon Graphics Corp. (it kept the SGI moniker).

Currently, SGI has approximately 1,100 employees worldwide and had US$533 million in revenue during fiscal 2016. The new SGI built revenue back up following the acquisition, but as noted by a Business Insider article, its annual revenue has taken a hit in the last few years. Contrast its current revenue to its reported US$767 million in 2013. It’s a significant decrease.

According to Antonio Neri, executive vice president and general manager of of HPE’s Enterprise Group, the acquisition will strengthen HPE’s presence in the growing big data analytics market as well as expand its presence in verticals like government, life sciences, higher education and research, manufacturing and supercomputing. Neri expects the transaction to be completed in the first quarter of fiscal year 2017. It’s subject to regulatory approvals and other closing conditions, he noted in a blog post.

“At HPE, we are focused on empowering data-driven organizations,” Neri said in a statement. “SGI’s innovative technologies and services, including its best-in-class big data analytics and high-performance computing solutions, complement HPE’s proven data centre solutions designed to create business insight and accelerate time to value for customers.”

With the acquisition, HPE is not only removing an HPC competitor, but also strengthening its own portfolio. The HPC market is growing, in part because of its ability to fuel big data analytics, and HPE executives would no doubt like to capture more revenue as the market continues to grow over the next several years.

It’s unclear so far how or when SGI’s assets will be fully integrated into HPE’s portfolio. It will also be interesting to see if the vendor can reverse SGI’s shrinking revenue to benefit all stakeholders, including its own channel partners.