In-Depth

Gloves Come Off in Fractious Data Warehousing Appliance Space

Teradata, Netezza, and DATAllegro take aim at one another.

• By Stephen Swoyer
• 12/14/2005

The gloves have come off in the burgeoning data warehousing appliance space. Earlier this year, executives at two of the leading appliance vendors—Netezza Inc. and DATAllegro Inc.—and at appliance powerhouse Teradata (a division of NCR Corp.) were loath to acknowledge the reality of competition with one another. Nowadays, however, things seem to be changing.

Take Teradata, for example, which has long maintained that it doesn’t directly compete against Netezza or (more recently) DATAllegro in most accounts. That might be changing. For the record, Teradata officials say they still don’t see very much of either vendor, but—in cases where they do bump heads—it’s more a case of overlap or “complementarity” than competition. Teradata officials typically dismiss Netezza (and DATAllegro) as data mart-only plays. And—to be fair—both vendors typically first gain traction in customer accounts by marketing their solutions as data mart appliances.

Netezza says it’s a different kind of company these days. With half a decade of experience under its belt and nearly 50 customers in its rolodex, Netezza is scaling-on-up to EDW range says vice-president of marketing Ellen Rubin. “Are there architectural limitations to [using Netezza as an] EDW? No. We are absolutely able to be used like that, and a lot of the issues people have [with deploying Netezza as an EDW] were the newness of the company and the fact that we were still building our [customer] base,” she comments. “In those cases, there’s usually a desire to ‘bring them in and kind of give them a piece to see how they do.’ But we have unbelievable repeat buying among our customers. With few exceptions, every customer has come back and bought additional products from us.”

Does this mean that customers are deploying Netezza as their EDW? Yes, says Rubin—although she declines cite any specific examples. “We’ve made progress in terms of both competing against Teradata and in terms of actually replacing them in some cases. We’ve made a lot of progress against them in the market.”

DATAllegro is the new pure play on the data warehousing appliance block. The company currently has less than 10 customers, but says it can more than double that (to at least 20) over the coming year. In most cases, officials say, DATAllegro, too, is competing with Teradata. And even though DATAllegro typically pitches itself as a data mart, company officials say that it, too, is being embraced for some EDW scenarios

Says DATAllegro CEO Stuart Frost: “At the end of the day, whether it’s a data mart or a data warehouse is an interesting question. Sometimes it’s a piece of the enterprise data warehouse infrastructure, where for example it’s a very large Teradata installation, where they’re doing mixed query workloads, they’re doing ad hoc on it, but the data volumes are getting such that the ad hoc is starting to slow down a bit, and they’re faced with a pretty expensive Teradata upgrade to handle that. So [customers] are looking at us to do ad hoc stuff on some tables, and it’s typically 10 TB in scope. I guess you could define that as a data mart, but that’s a lot more complex than the average data mart, isn’t it?”

So are there any cases in which DATAllegro has been tapped as a classic EDW? It’s a moot point, Frost claims.

“A lot of these [data warehousing] projects weren’t happening before because it was just perceived as being far too expensive, so in many ways we’re enabling new applications to be built, and that’s certainly the case in a lot of the accounts we’re selling into now,” he comments. “One of the nice things about [the appliance model] is that it’s sort of expanded the idea of what a data warehouse is. And because of the price [and] performance [qualities], it’s made data warehousing affordable for projects that might not have seen the light of day.”

There’s one thing all three vendors can agree on: in the high-end data warehousing space—i.e., 10 TB and up—the biggest competitors are IBM and Teradata. DATAllegro, for example, says it doesn’t run into Netezza too terribly much in this space. The latter company, for its part, claims not to have encountered DATAllegro all that frequently, either. And yet both companies claim to have notched several large—25 TB and above—deals.

Going forward, the appliance space will almost certainly become even more interesting. IBM itself became a data warehousing appliance vendor this summer, with the announcement of its pSeries-based DB2 Balanced Configuration Unit (BCU) RISC/Linux appliances. Netezza officials say they’ve already locked horns with Big Blue’s warehousing appliance in some customer accounts—and that they expect to do so more frequently in the future.

Says Rubin, “That is their appliance; that’s their response to us. But you’d have to say that it’s also pretty much a validation of the [appliance] approach. We will go head-to-head with them pretty regularly, and we’ve already done accounts where DB2 is entrenched and we’re competing against the DB2 [BCUs].” But Rubin says there’s plenty of room in the data warehousing appliance Big Tent for IBM, DATAllegro, and other emerging competitors. “We’ve done some market sizing estimates, and I guess for us where we’re really only targeting the high end of the market, there’s a lot of opportunity in the 1 TB-plus [space], where conservatively we estimate that it’s in the $15 billion to $20 billion range.”