San Diego’s ParAccel, Which Sprang From Netezza, Prepares for Next Database War

12/8/09Follow @bvbigelow

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2000 with the idea of re-inventing the enterprise-class data warehouse appliance. By developing an innovative system architecture and integrating the server, database, and storage in a single machine, Netezza made it substantially easier to analyze large amounts of data.

While  Zane helped to develop Netezza’s architecture, Ehrlich says, “What he learned was that Netezza had gone after the market without column-oriented data storage or commodity hardware.” Column-oriented database management systems, which store content in columns rather than by rows, can be used to analyze and compare data more efficiently—and commodity hardware offers advantages through lower pricing.

Zane brought both approaches together at ParAccel, which offers a relational database management system that supports standard SQL applications and can be implemented on hardware from Sun Microsystems, HP, or any other vendor—or as a virtual or packaged data warehouse appliance. Today, the company’s enterprise customers include OfficeMax, PriceChopper, Fidelity National Info, Nielsen IAG, BrightCloud, Travelzoo, and Database Architects.

In June, Menlo Park, CA-based Menlo Ventures led a $22 million Series C round of venture funding to expand ParAccel’s product development, accelerate sales and marketing, and ramp up services and support for its rapidly growing customer base. “The last couple of years have been focused on completing and refining the product,” Ehrlich says. “Now we’re investing in sales and marketing.”

The company’s other institutional investors are San Francisco’s Walden International; Menlo Park, CA-based Mohr Davidow; Palo Alto, CA-based Bay Partners; and San Diego’s Tao Venture Partners.

In keeping with the database industry’s tradition of intense competition, ParAccel also has taken an aggressive approach to capturing market share.

ParAccel contends that Netezza has based its technology on a proprietary system that locks customers into expensive Netezza hardware. So ParAccel moved to exploit its more affordable solution in September by provocatively announcing what it calls a “cash for clunkers” offer to any Netezza customers who switches to ParAccel. In a separate announcement, ParAccel issued a “Faster or Free” industry challenge and performance guarantee in which it promises to give away its software in any customer proof-of-concept test in which ParAccel fails to outperform all other competitors.

“No other company is willing to bet their revenue on beating out the platforms out there,” a spokesman for the company wrote me. “It’s an industry challenge that’s definitely an aggressive move.”

As Wade reported in July, Netezza, has not been indifferent to increasing competitive pressure from ParAccel and others. The Massachusetts company introduced a new line of hardware built around commodity blade servers (instead of their previous custom architecture) at one-third the cost.

While ParAccel’s “cash for clunkers” program specifically targets Netezza, the company also faces rising competition from a new generation of analytic database companies that includes Aster Data Systems, Greenplum Software Inc., Kognitio, and Vertica. It also remains to be seen how the traditional database vendors like Oracle, IBM, Sybase and Microsoft will respond to ParAccel’s challenge. But Ehrlich talks like he’s ready for another database war.

In discussing ParAccel’s rivals, Ehrlich says Oracle has positioned some of its recent offerings to compete in the burgeoning database analytics sector. “But it’s window dressing on a dinosaur,” Ehrlich says. “You can put a hat on, sunglasses and a mustache, but it’s still green and scaly, and if you want to go out on a date, there are better options available.”

Bruce V. Bigelow is the editor of Xconomy San Diego. You can e-mail him at bbigelow@xconomy.com or call (619) 669-8788 Follow @bvbigelow

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