Supercomputer maker Cray Inc. and Japanese rival NEC Corp. have buried the hatchet
and signed an agreement under which Cray will sell NEC's vector supercomputers
in the U.S. and the two companies will ask the federal government to drop massive
antidumping duties that have been imposed against those machines since 1997.

NEC also will invest $25 million in Seattle-based Cray as part of the 10-year
deal, which was announced Tuesday. In addition, NEC's North American supercomputer
marketing unit will be absorbed by Cray. However, Tokyo-based NEC said in a
separate announcement Wednesday that the agreement is contingent on the antidumping
duties being revoked.

The duties, amounting to 454 percent of the purchase price on NEC's vector
supercomputers, have made it virtually impossible to sell the machines to U.S.
users for the past four years. The U.S. government imposed the duties after
Cray filed a complaint against NEC, claiming that the Japanese company was pricing
its systems below fair market value.

In fact, NEC hasn't sold any vector supercomputers here since the duties took
effect. But under the terms of the agreement between the two companies, Cray
said it now plans to drop its dumping complaint and start reselling NEC's SX-5
Series machines as its high-end vector offering.

Jim Rottsolk, Cray's chairman and CEO, said in a statement that the NEC systems
"will fill an important gap" in the U.S. company's product line. Cray
sells a non-vector supercomputer and midrange vector systems, Rottsolk said,
"but we currently lack a strong high-end vector offering." The deal
with NEC will give Cray a full spectrum of systems again, he added.

A planned successor to Cray's top-of-the-line T90 vector system was cancelled
after the company was acquired five years ago by Silicon Graphics Inc., which
sold off Cray to Tera Computer Inc. in Seattle last spring. Tera renamed itself
as Cray after completing the acquisition.

An NEC spokeswoman Wednesday said the agreement with Cray should benefit both
companies. While Cray currently can't fill the demand for powerful vector-based
supercomputers in the U.S., she said, NEC has been having trouble expanding
its supercomputer revenue -- especially in North America, where Cray has existing
sales channels.

Debra Goldfarb, an analyst at market-research firm IDC in Framingham, Mass.,
said as part of Cray's announcement that the high-end vector supercomputer market
"has been hampered in recent years by Cray's involuntary absence, worldwide
[but] especially in the U.S." For some key technical and research applications,
she added, "there is no substitute for vector supercomputers."

The deal is expected to be finalized within 90 days, the companies said. Cray
will get exclusive rights to distribute the SX-5 systems in North America and
will take over the operations of Littleton, Mass.-based HNSX Supercomputers
Inc., which currently markets and supports NEC's high-performance systems. The
deal also gives Cray non-exclusive rights to market the SX-5 machines in the
rest of the world, including Japan.

» posted by ITworld staff

Computerworld

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