Netezza Pursues Broader Customer Base with Cheaper Data Storage Technology

7/31/09Follow @wroush

The reality in the IT world, as one executive at Marlborough, MA-based Netezza (NYSE: NZ) puts it, is that “the cost of adding more data to disks is getting closer to zero every day.” That’s not great news if your traditional business is selling high-performing servers at $60,000 per terabyte. So to keep growing, Netezza is getting more competitive on price.

Netezza’s newest data warehousing appliance, set to launch Monday, isn’t a custom-built box with all the elements specified and integrated by Netezza, like the company’s previous generations of machines, but rather an off-the-shelf blade server from IBM that’s got Netezza hardware and software inside. The new product’s price? $20,000 per terabyte, or one-third of what Netezza was charging before. [Update: Thanks to Curt Monash, publisher of the database industry blog DBMS2, for helping with clarifications to this paragraph.]

Called the Netezza TwinFin, this new product can actually hold a lot more data than its predecessors. The company hopes the radical price reduction, and better performance, will open up the market for data warehousing hardware to companies and industries that wouldn’t previously have considered using such specialized and expensive hardware.

In general terms, data warehousing means storing historical data (as opposed to real-time, transactional data) that can be mined for trends or insights to guide business decisions. For example, wireless operators use data warehouses to store cell-phone calling records and identify users who could be invited to switch to more profitable calling plans. The pitch at Netezza—whose 2007 IPO was one of the most successful in New England, raising more than $100 million—has always been that the company’s patented hardware architecture speeds up the database queries that companies must run against such data to draw out trends. The architecture relies on massive parallelism (doing many calculations at once) and some clever filtering of data through chips called field programmable gate arrays (FPGA) as it streams off of hard drives.

The performance of commodity blade servers from IBM and other companies has advanced to the point that they can handle the type of query volumes typically placed on Netezza appliances, says Phil Francisco, Netezza’s vice president of product management and product marketing. Netezza has relied on IBM’s latest blade servers, which include a slot for an expansion card, also known as a “sidecar,” in order to make the product faster and cheaper.

“We’ve used that sidecar technology from IBM to incorporate some of the secret sauce of Netezza, the field programmable gate arrays, which acts essentially as a turbocharger to speed up query processing and the decompression of data as it comes off the disk,” Francisco says. “It allows us to get the best of both worlds—the commodity platform along with the Netezza secret sauce.”

Francisco says the TwinFin is the first in a family of four appliances that will include an even cheaper, entry-level product, a high-capacity version for customers with huge datasets, and a memory-intensive version for “highly interactive or very operational deployments.” This, too, is a departure for Netezza, as the company’s previous appliances have varied only in their storage capacity, not their basic capabilities. The related appliances will be unveiled at the company’s user conference, Enzee Universe, in Boston in September.

By lowering the price of its systems, Netezza wants to get data warehousing appliances into small and mid-sized companies that wouldn’t have had the wherewithal to spend $60,000 per terabyte. “What we are trying to do is open up the market for anyone who has databases sized from a few hundred gigabytes up to a petabyte, which is a pretty wide swath.” The TwinFin will appeal to Netezza’s big customers in the retail, telecommunications, financial, digital media, pharmaceutical, and government sectors, Francisco says, but also will be affordable to smaller players in those niches.

So, at one-third the price, will Netezza be able to make up the revenue difference by selling at least three times as many appliances? “Certainly we anticipate that,” says Francisco. “That’s the whole point of being able to appeal to a wider set of customers.”

Wade Roush is a contributing editor at Xconomy. Follow @wroush

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