Data center server and storage vendor Rackable Systems' plan to acquire Silicon Graphics (SGI) comes less than two months after Rackable announced a revitalized channel partner reseller program. Both moves are designed to expand Rackable's markets in a year when hardware sales are contracting.

Data center server and storage vendor Rackable Systems plansto acquire all the assets of once mighty Silicon Graphics for approximately $25million in cash, Rackable Systems announced Wednesday morning. The announcementcoincides with Silicon Graphics filing again for Chapter 11 bankruptcy.

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Rackable Systems said in a prepared statement announcing thedeal that the combined business will offer customers market-leading hardwareand software technology within large-scale x86 cluster computing, highperformance computing (HPC), Internet, cloudcomputing, large-scale data storage environments and virtualization platformsacross many verticals and geographies.

Many observers have blamed Silicon Graphic’s bet on Intel’sItanium processor, rather than an industry-standard x86 platform, for the SiliconGraphics’ decline.

But executives at both companies expressed their confidencein the deal in prepared statements issued by Rackable Systems.

'The combined company will be positioned to solve themost demanding business and technology challenges our customers confronttoday,' said Mark J. Barrenechea, president and CEOof Rackable Systems, in a prepared statement. 'In addition, thiscombination gives us the potential for significant operational synergies, astrong balance sheet, and positions the combined company for long-term growthand profitability.'

Rackable’s move to acquire Silicon Graphics is only the mostrecent the company has made this year to expand its existing markets.

In February, Rackable announced a revitalized channel partnerprogram called the Eco-Partner Channel Program, looking to double the ranks ofits channel partners. Rackable’s program was designed to take its technology --which had been used by large companies such as MSN,Amazon.com, Facebook and YouTube -- to address the SMB market.

To answer that call, Rackable has created a standard set ofSKUs for partners to sell, plus they can still configure their own by using thecompany's configurator. It's the same tool used by Rackable's directsales force and now patched into the company's partner portal.

In February, Rackable said it had about 20 channel partnersand was looking to add 10 to 15 more. To qualify, partners must do $500,000 insales and hold certain certifications.

Overall, channel partners are expected to do deals that aresmaller than the ones the direct sales force does – in the $5 million to $10million range. However, 'If a channel partner brings a deal to us, it willalways be their account,' George Skaff, vice president of marketing atRackable, told Channel Insider in February. 'We are not going tohave a channel partner bring a deal to us and then take it direct.'

The program provides qualified partners with dealregistration, qualified lead distribution, the use of the Rackable Configuratorthat has been used by the company's direct sales force, joint sales engagementand business development, and joint go-to-market campaigns and events. Partnerswill get a partner portal.

In January, Rackable cut its revenue outlook and announced plans to lay off15 percent of its work force.
Rackable cut its revenue forecast for 2008 to between $245 million and $250million. In October, the company's 2008 revenue forecast called for revenues ofbetween $275 million and $300 million.
In January, Rackable said that the layoffs would save $4 million to $5 million annually.

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