Mavrodi's Giantism Leads Cray to Russia

Probably no one other than Sergei Mavrodi knows exactly what the MMM group has done with all the money invested in its various divisions. The destination of around $2 million in company funds, however, is now known: It was spent on a single computer, which could be the most powerful ever purchased for a commercial application in this country.


Last August, while Mavrodi was still in jail accused of tax fraud, MMM-Invest -- a division that is separate from the notorious MMM pyramid scheme -- paid in full for a 16-processor Cray Research Super Server 6400 system and a license for the powerful Oracle 7 database, according to Cray. The combined price of the hardware, software, licenses, import duties, installation and extra terminals for this computer could not have been less than $2 million.


Cray Research is famous for making the most powerful computers in the world. Its Y-MP supercomputers -- which look like props in a 1960s science fiction movie -- have become synonymous with solving extremely large scientific and industrial research problems, such as modeling climatic change and assessing the safety of nuclear power plants.


In recent years, the company has become vulnerable to competition from vendors selling powerful computers based on cheaper mass-produced microprocessors. In an attempt to widen the application of supercomputing technology in research institutes and the world's corporations, Cray Research formed a joint venture with SUN Microsystems, called Cray Research Super Servers. These machines run the SUN SOLARIS operating system, which means they can be used in conjunction with many smaller computers and can run thousands of standard industry applications.


The CS 6400 system bought by MMM Invest is typically used for large database applications. The data collected for the census in the United Kingdom is processed using one of these machines.


It is difficult to see what extra benefit MMM gets in purchasing such a monstrous machine. Though it may have the capacity to handle more transactions per second than any other computer in Russia, its power is useless if MMM cannot connect it to terminals in all of its branches. Without these connections, the database becomes a pointless exercise, since it cannot be updated quickly enough to be of any use.


A lack of telecommunications capacity is one of the biggest barriers to organizing these kind of applications. On-line connections to remote computers in other cities in Russia is either impossible or very costly. So far, the only major attempt has been made by Sberbank, which needs to connect 79 regional offices around Russia with its Moscow computer center. To do so it has had to buy satellite terminals for each of the Sberbank offices and will beam data to and from them using a large satellite station just outside Moscow. The project has cost many millions of dollars.


Yet unwittingly, as a result of its bravado, MMM has provided a service to other potential Cray buyers in Russia. Until it had actually sold a machine here, Cray Research Super Servers would not have opened a support office in Russia.


Based on the profits from this sale and the market momentum it could create, the company now plans a presence in Moscow next year. Uwe Wagner of Cray Research Super Servers says several Russian banks have now shown an interest in buying Cray Research CS 6400 systems. Unfortunately this is little consolation if you are one of MMM's investors, and are still wondering where your money went.





Robert Farish is the editor of Computer Business Russia


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