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9/18/2008
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Data Warehouse Market Heats Up

Teradata, Netezza, and Infobright tried to differentiate their offerings this week with new price points, specialized appliances, and open-source software.

Data warehouse vendors are working hard to roll out evolved products that deliver high-speed data mining at lower hardware and implementation costs. Much of the impetus comes from growing competition.

Teradata, which introduced its first line of data warehouse appliances in April, already has replaced one of those models. It rolled out the 2550 on Monday, which is smaller, faster, and cheaper than the short-lived 2500 and starts at $119,000 per terabyte compared with the 2550's $125,000 starting price. Competition was a driving factor. The data warehouse market is "somewhat fragmented at the entry level, so we want to make sure we can play in that space," said Scott Gnau, Teradata's chief development officer, in an interview.

One difference in vendor approaches is appliances versus specialized software that mines columns of compressed data packets rather than rows of data. Both are receiving attention: Startup Infobright, which uses the column approach, got a $10 million cash infusion from Sun Microsystems and two venture capital firms, according to a Monday announcement.

Why Sun? Infobright is based on Sun's open source MySQL database and, notes Forrester Research analyst James Kobielus, is the first to launch a significant rally around open source, announcing Monday a developers' community and a free community edition. While Infobright doesn't provide an appliance, Sun's investment "would seem to hint at future plans... in that direction -- we'll see," Kobielus said in an e-mail interview.

The two approaches aren't always exclusive: ParAccel, Sybase, and Vertica Systems now offer column-based appliances. And a 2-year-old Silicon Valley startup named Kickfire offers an appliance that uses Sun's MySQL, but unlike standard MySQL, it uses the column approach. Kickfire said in July it has raised $20 million in a second round of venture capital funding.

Other Ways To Stand Out

Netezza, a data warehouse appliance pioneer and still a market leader, is moving toward more industry-focused offerings as a differentiator. It announced Tuesday a deal with business intelligence software company Actuate to design appliances for the financial services market and also announced a software module for geospatial analysis that retailers might use to identify future store locations or insurers might use to predict areas prone to natural disasters.

Data warehouse company Greenplum, which partners with Sun on a data warehouse appliance, earlier this month said it would partner with Talend, a provider of open source data extraction software, on integration, marketing, and sales efforts.

All these developments signal that data warehousing is becoming "inexorably cheaper," more focused on quick deployment, and more open source-oriented, Kobielus said. Netezza's success is a bellwether of the market's reception of appliances: the 8-year-old company had $127 million in sales for its fiscal year ended in February, up 59% compared with the previous year. Its customers include Amazon.com, Thomas Cook, and a number of nationwide retailers.

The opportunity isn't lost on the IT giants. In July, Microsoft revealed plans to acquire data warehouse appliance vendor DATAllegro, which it sees as helping drive sales of SQL Server. Oracle and Hewlett-Packard announced in June a data warehouse appliance based on the HP BladeSystem c7000, following partnerships for appliances with Dell and Sun in late 2007; IBM also entered the market in 2007.

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