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Article

IBM Buys Netezza

IBM timed the announcement to coincide with Oracle’s OpenWorld festivities which are just getting off the ground

IBM said Monday morning that it's buying Netezza, the data warehouse appliance company that competes with Oracle's vaunted Exadata widgetry, for roughly $1.78 billion net of Netezza's bank book.

IBM timed the announcement to coincide with Oracle's OpenWorld festivities which are just getting off the ground.

It said it would pay $27 a share cash, close to a 10% premium, modest compared to the recent HP-3PAR deal. Wall Street evidently thinks IBM's bid may be challenged like Dell's was for 3PAR because the punters, probably thinking of Oracle, immediately bid Netezza's stock up over $27 on the news.

IBM, on the other hand, expects the acquisition to close in Q4.

Oracle has been lording Exadata over IBM in ads on the front page of the Wall Street Journal claiming "Sun runs Oracle twice as fast as IBM's fastest computer" and putting up $10 million for anyone - including IBM - to prove it wrong. The Exadata box used to be based on HP hardware until Oracle bought Sun out from under IBM in a deal that finally closed earlier this year.

Netezza's appliances, which are based on IBM machines, are supposed to handle complex analytic queries 10 to 100 times faster than traditional systems. By comparison, Netezza claims that Oracle's Exadata, which Oracle has admitted was at least partly inspired by Netezza, "is primitive, slow, expensive, closed, power-hungry, cannot handle advanced analytics and requires significant management overhead."

IBM and Netezza have had a strategic relationship for some time delivering integrated systems, software and storage for analyzing vast amounts of complex data.

IBM, which also competed with Netezza, waved around a recent global IBM study showing that 83% of CIOs identified analytics as a top priority. Netezza boxes are targeted at departments in organizations such as sales, marketing, product development and human resources, letting IBM say it "bringing analytics to the masses."

The widgetry will be sold by IBM's recently combined Software and Systems unit under Steve Mills, which has adopted the gospel of integrated hardware and software that Oracle CEO Larry Ellison is now spouting.

Netezza currently claims 350 customers including eHarmony, Neiman Marcus, Time Warner, Estee Lauder, Blue Cross Blue Shield of Massachusetts, Sapporo and NYSE Euronext.

IBM, which has spent $12 billion in 23 analytics related acquisitions in the last four years, has 6,000 consultants dedicated to analytics in-house and calculates that its analytics business grew 14% in the second quarter. It intends to integrate Netezza into its Information Management software portfolio. Netezza has approximately 500 employees.

More Stories By Maureen O'Gara

Maureen O'Gara the most read technology reporter for the past 20 years, is the Cloud Computing and Virtualization News Desk editor of SYS-CON Media. She is the publisher of famous "Billygrams" and the editor-in-chief of "Client/Server News" for more than a decade. One of the most respected technology reporters in the business, Maureen can be reached by email at maureen(at)sys-con.com or paperboy(at)g2news.com, and by phone at 516 759-7025. Twitter: @MaureenOGara

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