U.S. supercomputer sales expand as international markets grow

Supercomputers, the most powerful computers in existence today, are undergoing explosive market growth as they move beyond government and research laboratories into commercial applications. Currently, U.S. suppliers dominate over 80 percent of the world market outside of Japan and are successfully winning sales in the Japanese market.

The Evolution of Supercomputers

Today's supercomputers are descendants of the first U.S. supercomputers developed during the 1960s and 1970s. Seymour Cray, the acknowledged father of modern supercomputers, developed some of the first systems for Control Data Corporation. He left Control Data in 1972 to found his own company, Cray Research. In 1976, Cray installed its first system and the company is now the world's leading supercomputer vendor.

Government laboratories were the first customers of modern supercomputers and employed these advanced systems for computational physics. Los Alamos National Laboratory and Lawrence Livermore National Laboratory used high-performance scientific computers for modeling the complex interactions among atomic particles for fusion research. The National Weather Service and the European Center for Medium-Range Weather Forecasts were also among the first customers and used supercomputers for weather modeling and forecasting.

Supercomputers today are used by the government for energy research, space exploration, and military applications; by industry for simulation, design, research, analysis, and forecasting; and by researchers in areas ranging from mathematics, computer sciences, physics, and chemistry to astronomy.

As scientific research grows ever more complex, a concomitant requirement for higher performance computer systems emerges. Theoretically, demand for supercomputer power will never be satisfied as scientific frontiers continue to push beyond existing computer technology.

Supercomputer Applications

Supercomputers allow scientific and engineering researchers to process huge computational problems that otherwise could not be practically solved. Scientists and engineers are able to use computer modeling to study phenomena that are impractical or dangerous to observe directly. For example, NASA programs a supercomputer to simulate space travel, and the Department of Defense employs supercomputers for a broad array of military programs, ranging from aircraft design to the simulation of large-scale warfare.

As the price/performance of supercomputers and other high-performance computer systems increases, it opens up new areas of applications previously considered unfeasible. New supercomputer applications include such areas as econometric modeling, automobile crash simulation, battle simulation, and symbolic processing related to artificial intelligence. Software to harness supercomputer speed for commercial applications is increasingly available, which has helped to open up the commercial markets for these systems. U.S. suppliers lead in software development, thereby making U.S. supercomputers extremely competitive internationally.

Commercial Uses of Supercomputers

Petroleum companies were among the first commercial purchasers of supercomputers. In a business in which a small increase in the output of a petroleum reservoir can translate into millions of dollars, the tremendous number-crunching capabilities of supercomputers were quickly put to profitable use. Arco Oil and Gas Company maintains that supercomputing saved the company $3 billion at Prudhoe Bay, Alaska. Arco used a Cray-1 supercomputer to model petroleum reserves there. Arco's effective employment of supercomputer technology resulted in a 2 percent increase in the yield from recoverable reserves for the company.

A picture is worth a thousand words, or in the case of a supercomputer, millions of dollars. Manufacturers today are using supercomputers to draw two- and three-dimensional pictures of proposed product designs. The simulated models allow design ideas to be explored and tested before a commitment to production is made.

Designers of airplanes, helicopters, automobiles, and ships can model the fluid flow around proposed shapes with supercomputers and modify trial designs quickly. Aircraft designers have long relied on wind tunnels to evaluate the aerodynamics of airplanes and sections. Wind tunnels, however, are not as cost-effective as supercomputer simulations and cannot detect certain airflow phenomena. Supercomputers offer transportation manufacturers a more effective design method in terms of cost and reliability.

Automotive companies have also put supercomputers to profitable use. Ford Motor Company used a U.S. supercomputer to design the 1986 Ford Taurus. Six times the industry average of design alternatives were used to develop the Taurus, and Ford estimates it saved $6 million in design and testing costs. Toyota announced on March 17 its decision to purchase a U.S. supercomputer for approximately $8 million. The purchase was made, according to a Toyota spokesperson, to strengthen structural analysis technologies at the company and reduce vehicle development time. American and Japanese automakers are not the only ones in the market for U.S. supercomputers: Volkswagen of West Germany currently uses a U.S. supercomputer, and other European automotive companies, such as OPEL and Peugeot, are now designing their new products with supercomputers.

World Markets

Private sector demand for supercomputers worldwide is currently approaching that of the public sector. The United States remains the largest single user of supercomputers in the world, representing more than half of the installed base. Private sector installations (excluding universities and national laboratories) constitute 40 percent of the U.S. supercomputer market. Two U.S. manufacturers produce roughly 80 percent of the supercomputers in use throughout the world, while three Japanese suppliers account for the remainder. During 1987, 85 new supercomputer systems were installed, raising the total world installed base to 330 units at the end of 1987.

The global supercomputer market may become increasingly competitive as the prospect of multibillion-dollar sales by the early 1990s attracts new players into the market. A number of suppliers in other sectors of the U.S. computer industry are showing a keen interest in supercomputing and may enter this market over the next few years. Japanese computer manufacturers are already formidable competitors and have substantial resources at their disposal to invest in capital expansion and R&D. Several European electronics firms may also emerge as new entrants into this market if advanced R&D projects already under way produce viable commercial products. Europeangovernments have supported supercomputer R&D with significant national programs and through the European Community's ESPRIT program.

Minisupercomputers

A growing and dynamic market has developed for a new class of American-produced computer systems called minisupercomputers. These systems bridge the price/ performance gap between the powerful and expensive supercomputers and the less powerful superminicomputer. Minisupercomputers provide approximately 25 to 35 percent of a supercomputer's performance, but at a fraction of the cost. Minisupercomputers are used in many of the same application areas as supercomputers, such as design automation, scientific research, graphics, and atmospheric modeling.

According to the market research firm, Dataquest, U.S. minisupercomputer suppliers earned revenues in 1987 totaling $190.2 million. The U.S. market represented 67 percent of revenues, while Western Europe provided 25 percent of the total. The Japanese market followed with 6 percent of 1987 revenues. The number of minisupercomputers shipped last year totaled 437 worldwide. To date, there are no foreign suppliers in the same class as U.S. minisupercomputer manufacturers. Some Japanese producers of low-end Japanese supercomputers and integrated array processors, however, do compete with U.S. minisupercomputer firms for sales. In addition, some of the European research efforts may threaten U.S. dominance . in this computer class over the near term as European-developed technology is marketed commercially.

The Japanese Market

Japan is the second largest single-country supercomputer market in the world, with approximately 58 supercomputers installed, . including systems for internal use by supercomputer makers. Through 1987, Japanese supercomputer installations (excluding those for . internal use) break out almost evenly between the public and private sectors, with 24 systems . installed at government and public university sites and 22 in the private sector. Last year alone, the Japanese Government procured 12 new supercomputers, including one Cray add a Control Data/ETA system. The two U.S. supercomputers, to be installed this year, represent the first U.S. supercomputer sales to the Japanese public sector.

Commerce Department Programs In Japan

The Commerce Department has combined a program of industry analysis and trade policy efforts with export promotion activities to support U.S. supercomputer sales in Japan. The U.S. Embassy's commercial staff in Tokyo has been very active in promoting U.S. supercomputers in Japan. The U.S. commercial office in Tokyo organized a five-city tour last June for nine U.S. supercomputer and minisupercomputer companies through those companies' Japanese subsidiaries. The companies held seminars in each city and followed up with one-on-one meetings with potential sales leads.

During 1987, the U.S. Government undertook talks with the Japanese Government regarding U.S. companies' lack of access to Japanese Government and university supercomputer procurements. In August of last year, the negotiations culminated in the announcement of new Japanese Government procedures for supercomputer procurements. (See box at right describing the new procedures.)

Commerce followed the announcement by taking an executive-level supercomputer trade mission to Japan in October. The participating executives from 13 American computer companies held supercomputer symposia in Tokyo and Osaka, met with high-level Japanese Government officials, and individually visited potential customers or distributors. The mission was led by Joan McEntee, Deputy Assistant Secretary of Commerce for Trade Development. Companies participating in the mission felt that U.S. Government leadership was key at this stage of opening up the Japanese market. One company executive stated that the mission "put the (Japanese) government as well as industry on notice that we're here to do business."

This month, the U.S. and Foreign Commercial Service in Tokyo is helping Cray, Control Data Corporation, IBM Japan, Floating Point Systems, and UNISYS to organize the visit of potential Japanese end-users to the U.S. companies' American headquarters. The mission's objective is to promote sales by inviting Japanese customers to U.S. sites.

In June, the Department of Commerce will lead a U.S. supercomputer and minisupercomputer mission to Japan for five days of individual meetings with potential customers and a mini-exhibition. This trade mission aims at increased U.S. computer exports to Japan in both the public and private sectors. Each company will have a booth in the U.S. Export Development Office in Tokyo featuring a video display (in Japanese) of its product. The miniexhibition will emphasize applications of supercomputer technology and show Japanese manufacturers and researchers the benefits of using the products of the companies participating on the mission. The deadline for participation is April 15. For more information about the mission, contact Lauren Kelley, Supercomputer Industry Analyst in the Office of Computers and Business Equipment, at (202) 377-0571.

Japanese Government Procurement Procedures

Effective Aug. 7, 1987, the Japanese Government established new supercomputer procurement procedures for the Japanese public sector and universities. The new procedures aim at open and transparent procurements for supercomputers over 100 megaflops performance and include such important provisions as:

* full coverage of both ministries and quasi-governmental agencies;

* full and equal participation by U.S. firms in the earliest stages of the procurement process;

* significantly longer time periods in which companies can prepare bids that are responsive to the requirements of the procuring entity;

* increased priority accorded to technical factors as opposed to price;

* advertisement of upcoming procurement opportunities in the The Kampo (the Japanese Government's official publication, similar to our Federal Register);

* complaint and protest procedures that may be initiated by a supplier; and

* non-discriminatory performance testing (benchmarking).

MINISUPERCOMPUTERS

1987 REVENUES BY END-USE

End-Use 1987 Revenues

($ millions)

Design Automation $48.5

Industrial Automation $0.6

Chemistry $15.4

Laboratory $6.3

Medical $1.7

Earth Resources $9.0

Real Time/Data Acquisition and Development $27.3

Graphics/Animation/Imaging $17.4

Software Development $2.2

Computer-Aided Publishing $0

Scientific (General Analysis and Scientific

Research) $31.0

Other (Government, Atmospheric Modeling

and Macroeconomic Modeling, etc.) $29.1

TOTAL $190.2

Source: Dataquest

COPYRIGHT 1988 U.S. Government Printing Office
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