I think your analysis of the shifting technology landscape is largely on target. However, I'm not convinced that the true root of SGI's failure was the technology. Clearly their tech did need to evolve significantly for them to remain competitive but that's a transition which many companies successfully make. Even though SGI chose not to evolve the tech soon enough, fast enough nor far enough, I suspect they still would have failed to survive that time period due to an even more fundamental root cause: their entire corporate structure wasn't suited to the new competitive environment. While the "desktop transition" was most obviously apparent in the technology, I think the worst part for SGI was that the desktop shift changed the fundamental economics to higher volumes at lower costs.
SGI had invested in building significant strengths and competency in its sales and distribution structure. This was one of their key competitive moats. Unfortunately, not only did the shift in economics make this strength irrelevant, it turned it into a fundamental weakness. All that workstation-centric sales, distribution, service and support infrastructure dramatically weighed down their payroll and opex. This was fine as long as they could count on the higher margins of their existing business. While it's easy to say they should "just layoff all those people and relaunch as a desktop company" that can't be done in one quarter or even one year. It requires fundamentally different structures, processes, systems and skill sets. Hiring, training and integrating all that while paying for massive layoffs and shutting down offices, warehouses etc takes time and costs a lot of money.
Worse, once their existing workstation customers saw them shutting down the SGI the customers had bought workstations and service contracts from to become a different kind of company entirely, sales revenue would have taken an overnight nosedive. SGI's stock would also have tanked far more immediately than it did as the fickle stock market investors sold stock they'd bought because SGI offered a specific risk/return expectation which just became much more "risk" and much less "return" (at least in the near-term). In making such a dramatic move SGI would have effectively dumped much of their current quarterly revenue and the value of one of their core strengths - all at the same moment. Thus turning them into one of their emerging startup competitors with all of a startup's disadvantages (no big ongoing revenue streams, no big cash pile (or high stock valuation to leverage for cash)) yet none of a startup's strengths (nimble, lower-paid staff and more patient venture investors).
The point of my earlier post was mainly that a true disruptive market shift is nearly impossible for a large, established incumbent to successfully survive because they basically have to rapidly turn into someone else almost overnight. How can a champion sumo wrestler survive a shift so dramatic that their sport quickly turns into a track meet? Even seeing it coming doesn't help. How does one even prepare for such a shift since losing mass turns you into a bad sumo wrestler long before you even start being a viable sprinter? As Christiansen observed, such disruptions are often enabled by technology but the actual cause of incumbent death is often due to the shift turning an incumbent's own strengths into weaknesses almost overnight.
I don't think you need to shut down that distribution. Because fundamentally, existing costumers often continue to buy existing product at existing prices, as long as they get a faster product. This was something that Gordon Bell pointed out. Existing costumers are design to work at that level of expense. Expensive graphics workstations and rendering servers and so on still exist.
Sure it would go down eventually as all business does in the long run.
The real failure is not picking up new business along the way. With the N64 they showed they could design a consumer product. But outside of that they were in no future consoles. 3dfx and ArtX both came from former SGI. You don't need to stop selling workstations just because you make chips for consoles and other such devices. Nvidia barely survived and might not have if not for consoles. There are other markets where their expertise could have been applied.
Surviving changes like that often requires finding other markets. And then when it comes to making hard choices you need to cut part of the thing that is unprofitable. But this is really hard to do and in some ways it goes against the 90s US corporate philosophy of focusing only on the 'Core' business. DEC for example sold profitable business units that might have been helpful to have. DEC had a printer business and had the potential for a Database business. Oracle calls RDB one of the best acquisitions.
> the N64 they showed they could design a consumer product. But outside of that they were in no future consoles. 3dfx and ArtX both came from former SGI. You don't need to stop selling workstations just because you make chips for consoles and other such devices.
Commodore tried for a play where their - still much lower end - newest generation chipset would have scaled (with the same chips) from being a full low end computer, console, or set-top box, computer (it had a PA RISC core on chip, so could run standalone), a high end graphics card for PCs, and the chipset for a higher end Amiga at the same time.
They ran out of money - short maybe a few million - before being able to test if that would have worked as a way to widen their market.
I wish we'd have gotten to see how that'd unfolded, though Commodore's deep management dysfunction probably still would have made it fail.
During the Amiga era Commodore's board was controlled by old-school big business / Wall Street suits who had literally zero clue about computers or even technology in general. For a while toward the end the inside rumors were that the powers controlling the board were primarily benefiting from international currency and tax games and were cutting costs to harvest whatever cash they could into offshore tax havens while refusing to invest a cent back into saving the company.
Legend says Commodore was at some point approached by Sun willing to OEM their Amiga 3000/UX machines as entry-level Unix workstations and sell them through their distribution channels. The same accounts say Commodore management refused (maybe because the deal had a non-compete part).
They also missed an (earlier) boat with the Commodore 900 workstation, which would run Mark Williams' Coherent OS (a Unix-like system).
Commodore is one long history of management failures... As a big fan at the time, without insight into how dysfunctional it was, it was thoroughly depressing both to see from the outside, and then reading up on the internal chaos years later. It's a miracle they survived as long as they did, and at the same time there were so many fascinating lost opportunities.
ChuckMcM was at Sun at the time, and mentioned a while back he tried to get Sun to buy Commodore outright:
> They also missed an (earlier) boat with the Commodore 900 workstation
They didn't really miss the boat on that. The C900 wasn't really an attractive machine. They would have sold it at a pretty high price. At the same time you could buy a PC with Unix on it that was arguable better. It would have just been another market where they got clobbered by the PC. Not like Zilog was the right horse to bet on anyway.
Many Amiga engineers were UNIX heads, and even Amiga DOS /Workbench started as what might be another take into UNIX like systems with multimedia hardware, when they pivoted away from a games machine.
There are some vintage computer club talks where they dive into this.
On the other hand, thankfully they haven't taken that approach, as otherwise wouldn't have been the multimedia machine it turned out to be, or have OS design decisions like its use of Libraries, Datatypes and everything scriptable that are yet to be mainstream.
With exception of a few UNIX systems like Irix, Solaris with NeWS, NeXTSTEP, Apollo, everything else tends to be the same deck of cards reshuffled.
SGI had invested in building significant strengths and competency in its sales and distribution structure. This was one of their key competitive moats. Unfortunately, not only did the shift in economics make this strength irrelevant, it turned it into a fundamental weakness. All that workstation-centric sales, distribution, service and support infrastructure dramatically weighed down their payroll and opex. This was fine as long as they could count on the higher margins of their existing business. While it's easy to say they should "just layoff all those people and relaunch as a desktop company" that can't be done in one quarter or even one year. It requires fundamentally different structures, processes, systems and skill sets. Hiring, training and integrating all that while paying for massive layoffs and shutting down offices, warehouses etc takes time and costs a lot of money.
Worse, once their existing workstation customers saw them shutting down the SGI the customers had bought workstations and service contracts from to become a different kind of company entirely, sales revenue would have taken an overnight nosedive. SGI's stock would also have tanked far more immediately than it did as the fickle stock market investors sold stock they'd bought because SGI offered a specific risk/return expectation which just became much more "risk" and much less "return" (at least in the near-term). In making such a dramatic move SGI would have effectively dumped much of their current quarterly revenue and the value of one of their core strengths - all at the same moment. Thus turning them into one of their emerging startup competitors with all of a startup's disadvantages (no big ongoing revenue streams, no big cash pile (or high stock valuation to leverage for cash)) yet none of a startup's strengths (nimble, lower-paid staff and more patient venture investors).
The point of my earlier post was mainly that a true disruptive market shift is nearly impossible for a large, established incumbent to successfully survive because they basically have to rapidly turn into someone else almost overnight. How can a champion sumo wrestler survive a shift so dramatic that their sport quickly turns into a track meet? Even seeing it coming doesn't help. How does one even prepare for such a shift since losing mass turns you into a bad sumo wrestler long before you even start being a viable sprinter? As Christiansen observed, such disruptions are often enabled by technology but the actual cause of incumbent death is often due to the shift turning an incumbent's own strengths into weaknesses almost overnight.