Thoughts on IBM Buying Netezza

Clearing some underbrush.

Speculation about what IBM/Netezza will do.

Speculation about alternative acquirers for Netezza.

Speculation about what IBM/Netezza competitors will do.

Apparently there's a deal breakup fee of around 3% of the purchase price. So yes, it's perfectly conceivable that IBM get outbid.

I've been getting some DB2 briefings, which is why I've blogged about some specialized technical points from same. But I can't yet say why the theoretically great-sounding data warehousing option DB2 isn't more successful in the market.

I haven't been briefed in any detail on IBM's more general analytic appliance stack, but I get the impressions:

Lots of analytic DBMS vendor told me about partnership discussions or actual partnership activity with IBM, perhaps via IBM's service arm and/or in specific geographies. So IBM acquiring one of them was never inconceivable.

The fact that Netezza currently happens to use IBM hardware for most copies of its TwinFin appliance is pretty irrelevant.

I hate it when my biggest clients get acquired, but it was pretty inevitable. Consolidation is happening.

Netezza had multiple positionings, which would have been unsustainable or at least under-optimal over time without some kind of M&A activity, including:

Netezza was really focusing on $1/2 million and up sales, except for some OEM appliance deals.

Netezza's detailed attacks on Exadata highlight differences between Netezza and one-size-fits-all approaches, and hence serve to remind us that Netezza/DB2 integration wouldn't be particularly natural.

Netezza's products are too successful and far along for IBM to shut down. This is not at all a Kickfire/Teradata situation.

I hope and trust IBM will get Netezza onto a more frequent and consistent hardware revision cycle, starting in, say, the second half of 2011.

Oopsie on the sometimes close, sometimes not-so-close Netezza/SAS relationship. It looks like Netezza/SPSS as the main focus going forward.

More generally, Netezza's high-end analytic positioning should be strengthened by IBM ownership. Netezza's approach to advanced analytics is more "kitchen sink" than tightly-designed integration, so mixing together Netezza and IBM technology should improve both.

However, the opposite kind of design considerations apply to Netezza's core DBMS functions. When it comes to database processing, Netezza's design is carefully integrated. Surely IBM can send over some engineers to teach Netezza some things it has figured out, but for most purposes DB2 and Netezza will remain as separate technologies, not integrated with each other

However, I expect IBM to totally revamp Netezza's data movement and integration. IBM is a huge player in data movement and integration. Netezza has been struggling even with its modest goals in the area.

I don't yet have an opinion as to whether IBM's primary full-stack analytic appliance strategy will be based on DB2, Netezza, or both.

However, pushing Netezza technology harder for OEM deals would make good sense.

Both IBM and Netezza believe in solid-state memory for data warehousing. Expect the merged company to be aggressive in that area.

HP would be an obvious Netezza bidder, in that HP clearly needs to change its DBMS appliance strategy. However, HP is a little busy changing CEOs.

Any big acquirer would add value to Netezza via the message "OK, the shoe has dropped, they're not going away, they have staying power, etc." But that's all Dell would add, and I question whether that's worth a bidding war. Besides, Dell wants to partner with as many vendors as possible.

NEC wouldn't add much more. Netezza is already doing great in East Asia anyway, from what they tell me, and Japanese enterprise computer companies have poor track records outside their home region.

Further consolidation is inevitable. The analytic DBMS market will not indefinitely support all of Oracle, IBM, Microsoft, SAP/Sybase, Teradata, Vertica, Aster Data, Infobright, and ParAccel. Yet each of those (I think even ParAccel) has a legitimate reason to continue business and product operations. And that's even before mentioning Kognitio, SAND, Kx, and so on, plus of course HP.

Over the next years, different styles of analytic DBMS engine could usefully merge.

Of all that, the part that would most naturally drive analytic DBMS vendor consolidation (as opposed to, say, tuck-in acquisitions from adjacent sectors) would be row-based/columnar integration. For example: