IBM Makes Offer For Netezza

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Here's an interesting blog from Forbes talking about the vendor market:

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Sep. 20 2010 - 1:13 pm

IBM’s Netezza; Who’s Next?

By QUENTIN HARDY


The next big move in Tech’s Giant Rollup is at hand. IBM says it will buy data warehousing analytics company Netezza for $1.7 billion. While Big Blue and its consultants figure out how to stitch that into their business, all of IBM’s giant competitors have to figure out how they can own something like it.

Something like data analysis company Teradata, which is up 6% so far today, and several other companies besides.

What is happening here is that the true giants of enterprise computing – IBM, Cisco, Hewlett Packard, Microsoft, and Oracle – have spent years buying up companies that can give them full command of corporate computing, and control of corporate data centers. The idea is to offer global clients a super sales contracts, huge enough to keep the multibillion-dollar revenues coming in.

Each company offers a view of the world according to its home strength, but everyone is in everyone else’s stuff. Cisco sells a network-centric world, partnering with EMC for storage. HP leads its pitch with servers loaded with management and analytic software, and paid $2.4 billion for storage company 3Par to keep Dell out of the biggest league. Oracle sells clients on the database-centric view of the world, but bought Sun Microsystems so it could servers too. In this line, so far Microsoft has stayed largely out of the hardware game, focusing instead on building up its data center business.

What no one can have enough of, it seems, is the kind of data analysis offerings like Netezza has. Life online, big corporate data centers, and plunging storage costs means that there is more data to be collected than ever before, and more demand to analyze it and find new patterns to exploit.

That is why Netezza is gone, barring a 3Par-like bidding war from one of the other giants, and why Teradata is up so much in today’s market. There are not a lot of companies capable of handing this work. IBM also timed the deal to break right at the start of Oracle’s 40,000-strong annual conference in San Francisco, stealing some of Oracle chief executive Larry Ellison’s thunder.

One possible purchase that must be getting looked at by all these giants must be privately-held SAS Institute. Not only is SAS first-rate in data mining and analytics, but it has a famously relaxed and family-friendly culture – just the kind of thing an acquirer would love to skinny down.

Cofounder James Goodnight looked seriously at taking SAS public 10 years ago, then counted his blessings he didn’t when the market tanked. He may be happy to be private, but billions would be put in front of him in a bidding war.

Then there are lesser, still attractive players. EMC earlier this year purchased GreenPlum, a smaller analytics company. Somewhat like GreenPlum is Kickfire, which makes clever use of cheaper computer to do analysis of fast transactions, like Internet commerce. Kickfire’s CEO was an early employee of Teradata, which new Oracle president (and former HP chief) Mark Hurd headed before taking over NCR, then Teradata’s parent. This is a small world.

Another possibility for takeover is Revolution Analytics, a company that capitalizes on an open source data analysis language called R. Revolution is headed by Norman Nie, who founded SPSS, a statistical analysis competitor of SAS that was purchased by – ta da! – IBM for $1.2 billion last year, which was two years after Nie left the company. Very small world.

Looking at all the data, and it’s possible to infer one thing: The bidding for analysis software is likely just getting started.