NERSC Franklin Cray XT4s - supercomputer cluster
AlamyA cluster of Cray supercomputers at the National Energy Research Scientific Computing Center, operated by Lawrence Berkeley National Laboratory and the Department of Energy.
By Bill Rigby

SEATTLE -- "Big data" means big computers, and good news for Cray Inc (CRAY).

The pioneer of supercomputers in the 1970s stood on the brink of obscurity 20 years ago but is now surging back to prominence. Its shares have almost doubled over the past 12 months.

The explosion of data -- measuring weather, traffic, health and countless other areas -- coupled with a desire to tease meaning out of it, demands greater computing power than is accessible via standard machines.

"The assumption was that supercomputers were cliche five years ago. People thought, 'I can run my simulation on my laptop'," said Barry Bolding, a Cray vice president, at the company's Seattle headquarters last week. "That may have been true, so long as the data associated wasn't growing as well. But raw data is being created in exabytes as we sit here. More data means bigger computer, bigger computer means more data."

Experts estimate that 2.5 exabytes -- or 2.5 billion gigabytes -- of data are now generated every day, and the world's capacity to store that data is doubling every 40 months, which all plays to Cray's strengths.

A basic Cray cabinet costs $500,000 and up and is roughly the size of a refrigerator. Big customers can group 200 or more into massive supercomputers worth hundreds of millions of dollars, such as "Titan" at the Department of Energy's Oak Ridge National Laboratory.

Titan, completed by Cray last year, is the world's third-fastest supercomputer, takes up the size of a basketball court and can perform more than 20,000 trillion calculations a second.

To be sure, most companies will never need that scale, or can process what they need through multiple machines running in tandem on a high-speed network or in the cloud, which for many projects works out cheaper and more power-efficient.

What makes supercomputers different is that they can make a huge number of interconnected calculations at the same time, rather than a consecutive list of unconnected calculations, which makes them good for running complex simulations and mining unrelated data.

For example, weather apps on smartphones are based on vast models run by research agencies on supercomputers. Financial firms can detect online fraud or cybersecurity breaches in seconds rather than days by using supercomputer models, which would take days on standard set-ups.

"Big data is a new term, but arguably the supercomputer market was the original home of big data, and Cray has been dealing with it forever," said Steve Conway, an analyst at tech research firm IDC.

Market on Fire

The Seattle-based company, with just over 900 employees and a market value of around $940 million, has changed ownership several times but was started in 1972 by Seymour Cray, the "father of supercomputing."

With a recent resurgence in supercomputers, Cray is garnering Wall Street's attention. This June, it sold one of its new XC30 supercomputers to the European Centre for Medium-Range Weather Forecasts for $65 million, nabbing a contract from a long-time IBM (IBM) customer.

That sort of deal is piquing investor interest. Wall Street analysts are expecting revenue of $519 million this year, up 23 percent from 2012, with a gross profit margin around 34 percent. Its shares are up 91 percent over the past 12 months while rival Silicon Graphics International's (SGI) are up 90 percent. Cray is now richly valued, with a share price 36 times estimated earnings for the next 12 months, compared with 19 times for SGI.

The global market for computers costing more than $500,000 is on a tear, according to IDC, having more than doubled to $5.6 billion in 2012 from $2.7 billion in 2008.

The whole market for high-performance computing -- essentially any machine bigger than a desktop used for intense computation -- is forecast to grow 7 percent a year through 2017, well ahead of the stagnant business server market.

The U.S. government directly or indirectly accounted for two-thirds of Cray's revenue last year. But the company is reaching out to new customers interested in big data. Last year it set up a new unit called YarcData -- Yarc is Cray backwards -- to focus on analyzing huge amounts of information and teasing out unseen patterns in a process known as graph analytics.

"Unstructured databases are becoming more prevalent, gathering raw data from everywhere," said Cray's Bolding. "Now you start asking very complex questions, and it starts to create links between sets of data."

The YarcData unit is helping the U.S. government detect fraud patterns in Medicare and Medicaid payments. Private sector customers include medical research group Mayo Clinic and several financial services, life sciences and telecommunications firms, which Cray cannot name for contractual reasons.

New efforts are working and should boost revenue over time, said Sid Parakh, an analyst at fund firm McAdams Wright Ragen.

"This is not a commodity market. It takes years of experience," said Conway at IDC. "It's easy to build a big computer, but it's not easy to build a big computer that works."

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yuccapucka

In twenty years through the use of nanotech miniaturization our PC’S shall be as powerful as today’s Cray computers, and more advanced Cray computers will reach the critical point of being conscious and intelligent. Cray is a good investment. Optical waveguides will replace wires. Photons will replace electrons. Electron will flow through superconductors in places where they are needed. Our computers will evolve into artificial android brains that are millions of times more intelligent than we are. They will do things that we have no way of understanding anymore than a dog understands how to build a radio. New technology created by our androids will seem as magic to us. Our androids will serve us!

October 21 2013 at 3:16 PM Report abuse rate up rate down Reply
cjaneke

Question: Who owns CRAY now??

October 20 2013 at 11:27 PM Report abuse rate up rate down Reply
Ron

Pretty soon we will have NO privacy at all!!!

October 20 2013 at 7:00 PM Report abuse -1 rate up rate down Reply
2 replies to Ron's comment
Mark

What do you mean pretty soon? You must have been sleeping...we already have no privacy at all.

October 20 2013 at 9:58 PM Report abuse +1 rate up rate down Reply
yuccapucka

All you need to do to gum up a Cray computer is to tell it to calculate the value of pi to infinity. 3.1.….>>>

October 21 2013 at 4:07 PM Report abuse rate up rate down Reply
yuccapucka

I believe that a Cray is just a logical web-work of thousands of interconnected microprocessors working in parallel with some fuzzy logic chips added for decision making. PC’S should be acquiring these parallel processing and fuzzy logic functions, in the far future as they are able to introduce into PC’S thousands of microprocessors built into tiny 3D fluid cooled microprocessor chip-cubes. These cubes would connected with each other over their surfaces into geometric designs whereby they shall communicate with each other using built-in nano-optical transceivers. Each cube could be powered by an internal nuclear battery.

October 20 2013 at 5:05 PM Report abuse rate up rate down Reply
Scott

Sell to Obamacare! It's got to be better than what they are currently using!

October 20 2013 at 2:26 PM Report abuse -1 rate up rate down Reply
Ric

In other words, computers are like women's fashion it time the old become new again.

October 20 2013 at 12:45 PM Report abuse +1 rate up rate down Reply
Shadow

Cray STILL needs to come up with the "Z" series for their next bunch of computers :-P

October 20 2013 at 11:49 AM Report abuse rate up rate down Reply