In-Depth

Teradata’s Split from NCR: Not Exactly Kramer vs. Kramer

Who will get what when Teradata splits from parent company NCR? Oddly enough, that doesn’t seem to be an issue.

• By Stephen Swoyer
• 01/24/2007

Who will get what when Teradata splits from parent company NCR Corp.? Much has been made—by this publication, at least—of the ultimate disposition of the NCR-branded hardware which powers Teradata’s data warehousing solutions. These servers are connected by means of a proprietary interconnect—BYNET—and, in tandem with Teradata’s Warehouse and other specialty software, they facilitate scalable and available access to enormous data volumes. For this reason, some industry watchers suggest, Teradata should get the hardware.

As it turns out, who gets the hardware isn’t really an issue: NCR effectually exited the server business in the early 2000s, officials say, while Teradata itself has since supervised the research and design of the NCR-branded servers that—in the vast majority of cases, anyway—power Teradata Database and Teradata Warehouse. The actual production of the servers, Teradata officials say, is done by OEM Solectron Corp. And that’s pretty much all there is to it.

“What we will [take with us] is what we call the NCR Server 5450, and that is the Teradata product that we have been using. NCR in general has gotten out of the hardware business for almost, well since the early 2000s,” comments Randy Lea, vice-president for Teradata products and services. “As we’ve transitioned, especially the Teradata division, we’ve designed our own servers. We’ve had an R&D division in San Bernadino … and [this] team really designs our built-for-a-purpose technology. We put in BYNET, UPS, battery backup, server management; we have automated failover, so if the hardware node fails, the software is basically told that the compute unit is down so it will automatically readjust to the other servers in the system.”

So why do the servers still bear an NCR brand? Call it a protracted weaning process. “About three years ago we started putting ‘Powered by Teradata’ on the box. And the ironic thing is even before the announcement that we were going to spin off, we were going to change the logo and put [on] Teradata’s logo [exclusively] and take NCR’s off,” Lea indicates. “The reality is that we’ve been operating kind of as an autonomous division of NCR. So the server—and it will be called the Teradata server—will come over in the transition.”

Lea and other Teradata officials say they’re excited about the transition.

“Teradata has always over the years taken a look at different market opportunities, much of it is the go-to-market model that we have today. Our model has primarily been a direct model, and it still is today,” he indicates. “We have actually increased our demand creation, our sales people, our field support—we’ve pushed our headcount into double-digit figures over the last three years. We are and have been growing feet on the street, and I think our business has reflected that.”

The upshot, Lea argues, is that an independent Teradata will be a much more focused Teradata: “Really all the way up through the chain, up to the board of directors, we will now be focused on our business and our business only. That’s always been the challenge, when you’re part of a larger company that maybe has a broader interest, and it’ll just be nice, now, that the board of Teradata will only be focused on the data warehouse market.”

At the same time, Lea stresses, a more focused Teradata doesn’t have to be a more aggressive—or a more rapacious—Teradata. As a division of NCR, Teradata established a reputation as one of the most partner-friendly players in the BI space. That shouldn’t change, Lea promises. “I think it’s business as usual. We’ve been rather successful the last couple of years. Our strategy has been a focus on partnering. We naturally want to partner with as many tools vendors as possible. That’s why we’ve been able to grow as much as we have.”

In the high-end data warehousing segment in which it has traditionally been dominant, Teradata intends to be an implacable competitor, Lea says. In this respect, he argues, the fractiousness of today’s data warehousing segment—where Teradata competes with appliance vendors Netezza Inc. and DATAllegro Corp., along with appliance-wannabes IBM Corp., Hewlett-Packard Co., and Sun Microsystems Inc.—isn’t entirely unprecedented.

“I’m not sure it’s become more competitive,” continues Lea. “I do think we had a lull in the early 2000s, but I’ve been in this business since 1992, and back then we had some competitors called RedBrick, Informix, Sybase, you name it. There were probably more competitors back then than there are today. We believe that the primary players are still Teradata, IBM, and Oracle in the data warehouse space. We believe that’s true today as well, but there are these new vendors who are trying to position themselves lower at the data mart appliance space.”

Lea doesn’t altogether discount the competitive threat posed by the appliance vendors, however.

“Are they making us maybe focus on that space maybe more than we have in the past? Yeah, [they] might have highlighted that there’s maybe more opportunity there than we had thought, so we’re taking a look at it,” he concludes. “But we compete against those guys every day, and we win a majority of the deals.”