Impact Report

Netezza unveils new 10000 series as it begins targeting federal government

Analyst: Krishna Roy
Sector: Storage & Systems »»
Date: 23 Jun 2005
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Netezza has announced a new line of data warehouse appliances – the Netezza Performance Server (NPS) 10000 series, which will be available in December. And it is preparing to unveil in October version 3.0 of its software, which will run across the new series as well as the older 8000 Series. The federal government is a new market segment it's now targeting, although telcos, retail and outsourced analytics remain its core markets. Customer momentum is building, and the company now has 60 systems installed at 28 customer sites.

Impact assessment

Context

Netezza has set a goal to be profitable in the second half of the year, having flirted with profitability a couple of times in 2004. The startup now has 60 of its data warehouse appliances installed at 28 customer sites, up from 17 customers at the beginning of the year. Average deal sizes have reportedly more than doubled in 2005 to about $1.5m and more than half of its customer base has now made repeat purchases. The privately held firm is still in expansion mode, having just opened a new office in McLean, Virginia, which will be the home of its federal division. This division is headed up by Steve Williams, who previously held senior positions at MicroStrategy and Clareos.

Federal government agencies are a new target market for the firm, which still regards telcos, retail and outsourced analytics as its core markets. It recently opened a sales office in Sydney, Australia, to target Asia-Pacific and reports that it will continue to focus on global sales and channel expansion throughout the rest of the year. Headcount currently stands at 170 employees, up from 140 at the beginning of the year. The majority of its business is direct right now, although indirect sales via software partners – which include most of the business intelligence community and systems integrators – are apparently growing quickly.

It is also looking to flesh out vertical market partnerships where its data warehouse appliances are bundled with third-party, industry-specific applications. Recent wins in the area include a multimillion-dollar contract with an unnamed US wireless carrier that it signed in May in conjunction with Vibrant Solutions. The carrier will deploy Vibrant's HyperAnalytics package with NPS to improve its reciprocal compensation billing application.

The company has raised a total of $68m in funding, the most recent of which arrived in January as a fourth round of $15m led by late-stage specialist Meritech Capital Partners and existing investors. Netezza said it doesn't need to raise more and plans to be self-sustaining this year. Matrix Partners, Charles River Ventures, Battery Ventures, Orange Ventures and Sequoia Capital have participated in previous rounds.

Products

In May, the company introduced a new NPS 10000 Series, to be available in December. These are higher-performance systems than the current NPS 8000 Series, but share the same raison d'etre: high-volume complex queries and ad hoc analysis of terabytes of dynamic detail using a combination of relational database, server and storage technologies. The introduction of the 10000 Series means that the product line can now scale up to 100 terabytes of data. An early target market for the 10000 Series is federal government agencies, which apparently need these larger appliances.

The 10000 Series comprises two models: 10400 and 10800. Both use the new 440GX PowerPC processor, which is also used by IBM in scientific applications. The 10400 can accommodate databases of up to 50Tb in raw user data, and the 10800 can handle databases of 100Tb. Both models also have faster memory than the 8000 series, because they're based on a next-generation field-programmable gate array, and more capacity by virtue of the larger 320Gb disk drives used. Netezza has also enhanced the chassis design with a new power distribution system, power supply and cooling system.

A new release of its software that will run across both the 8000 and 10000 series will be in beta in August and generally available in October. Release 3.0 sports enhanced workload management and controls in the shape of guaranteed resource allocation features, expanded bulk data movement for high-speed backup and recovery and full support for ODBC (Open Database Connectivity) version 3.5. Improved SQL-99 analytic support means that unique sequences can now be created for individual line items. Release 3.0 will also run on Red Hat 4.0.

Release 3.0 also includes support for materialized views. A materialized view essentially provides an automated method for performing smaller tactical queries. The materialized view is an extension of the system's zone map technology. The information in the zone map makes use of the natural ordering of rows in a database and is used to reduce the amount of data blocks of disk to be read when a query is run, which speeds the performance of small queries. Netezza has been supporting zone maps for more than a year. This capability has now been extended to operate on a defined subset of columns in a base table, making it easier and faster to run smaller queries, for day or intraday dashboard applications, for example.

Roadmap

Continuing to extend the price/performance advantages against traditionally MPP-based data warehouses will be an ongoing aim, as will improvements to the speed of bulk data movement. By the end of the year, it will release a data warehousing appliance capable of loading 500Gb of data per hour. Other ongoing development objectives are to increase the performance of individual CPUs in the system and to deliver localized and international versions to expand its global sales ambitions.

Competition

NCR's Teradata data warehouse division, IBM and Oracle are the incumbents it continues to compete against in the traditional warehouse sector. Netezza reports that it is winning business against IBM's Red Brick warehouse systems in end-of-life replacement situations where organizations don't want to migrate their existing warehouses to IBM's DB2 platform. However, the majority of its business comes from companies that already have a warehouse in place and are facing scalability issues as the warehouse grows in size.

More direct competition comes from newly emerging firms, including Datallegro and Calpont, that – like Netezza – are now delivering data warehouse appliances. Metapa, which was rebranded as Greenplum and now targets the open source data warehousing market, was an occasional competitor. But that firm's new focus means it's no longer a direct rival.

SWOT analysis