Dennis Byron submits: At Netezza (NZ), the Massachusetts maker of “analytic appliances,” the good news is that the company has its eye on Oracle (NYSE:ORCL). The bad news might be that Oracle has its eye on Netezza.
On January 7, 2008, Netezza upgraded its appliance family to scale to the petabyte level, and support improved data load speeds and shorter backup windows. At the 10th Annual Needham & Company, LLC Growth Conference on January 10th, company CFO Patrick Scannell says the new technology is all about going after the Oracle installed base, “the holy grail,” because so many Oracle database applications are really transactional solutions jury rigged to handle the query loads that Netezza addresses by design.
Oracle is not Netezza’s only big name competitor. HP (NYSE:HPQ) NeoView, a systems/services packaging approach from IBM (NYSE:IBM), the Teradata (NYSE:TDC) spinout from NCR, and the Sun (JAVA)/Greenplum partnership are also all coming after the same “analytics” opportunity. According to Scannell, that opportunity is $14 billion annually. He based his market sizing on a $4 billion software market revenue estimate from IDC with a $10 billion uplift for hardware and professional services of unknown source.
Netezza gets to claim to be “the global leader in analytic appliances” because everyone else sells the pieces of the solution as pieces, whereas with Netezza, as Scannell says, the offering is a “black box:” software, server and storage for one price (average selling prices just north of a $1 million) and no ordering a la carte, no mixing and matching.
Currently Netezza is getting 50% of its business (likely to exceed $100 million in its fiscal 2008, ending 1/31/2008) from telecoms and ebusinesses, but it wants to spread that across more industries in the next few years. In particular, it’s planning on targeting pharmaceutical manufacturers and the oil/gas industry. It is also betting on $5 million deals from the U.S. federal government (at the same time, Netezza is planning to “offshore” more of its R&D, which is already substantially “offshored,” something that is becoming an issue among U.S. politicians during election season).
Scannell says Netezza was both proud and a little leery when Oracle CEO Larry Ellisson recently mentioned that “little company from Massachusetts” in discussing the market. So when I say Oracle might have its eye on Netezza, I mean as a competitor. But with Oracle, you can never be sure.