Big Blue celebrated 100 years of success in the tech industry earlier this month. It’s a rare feat in an industry where companies are often rendered obsolete in a decade, oftentimes sooner. In fact, IBM has managed to stay relevant while literally thousands of tech companies have come and gone. So, what’s its secret recipe? One reason for its success is its aggressive attitude toward buying companies with great technology that integrate well into its portfolio.

As an ERP (enterprise resource planning) market analyst at Software Advice, I was intrigued by all the fanfare that’s been showered upon IBM this month. I also wanted to know more about its mergers and acquisitions strategy and which companies it might buy next. So, to predict the future, I rolled up my sleeves and went digging into the past. Since IBM is an acquisition machine, I limited my search to the last decade of deals.

After I culled the data, it became obvious that there are three markets that IBM likes to go shopping: professional services, middleware, and business analytics. For anyone familiar with IBM’s company profile, this isn’t really a shocker, but the sheer volume of purchases is surprising. In the past decade, IBM bought 14 companies in services, 13 companies in middleware, and made a couple of multi-billion-dollar deals in business analytics.

The Massachusetts Connection

There’s one more trend that I noticed in its purchasing history: IBM loves to buy companies in Massachusetts. Since 2003, it has picked up some 18 companies in the Massachusetts area (these 17 plus Netezza). Massachusetts is an obvious place to shop, with world-class tech universities; it’s a hotbed of technology innovation; and there are dozens of successful companies. In thinking about the Massachusetts connection, there is one company in particular that I couldn’t help but think about IBM buying: EMC.

EMC is the Holy Grail of Massachusetts technology. Its data storage and warehousing business is a multi-billion-dollar operation, and it has one of the most successful virtualization companies on the market (VMware). IBM is already involved in data storage—and is a competitor of EMC—but it has yet to make an aggressive move into the virtualization market. An IBM-EMC combination would create an utterly dominant force in the data storage industry.

IBM’s strategy in the virtualization market has been to play it safe on the sidelines and funnel money and support into things like the Linux KVM hypervisor, hoping that it could compete with VMware. It hasn’t worked. Instead VMware has become the go-to name for all things related to virtualization technology. But that’s exactly what makes buying EMC such an enticing proposition.

Would IBM Buy EMC?

So, what would IBM have to give up? The short answer is: a heckuva lot. IBM’s market cap hovers right at $207 billion, and EMC’s sits at a comparatively modest $55 billion. That means that IBM would have to give up about 20 percent of its company and then some to land EMC. It’s a massive sum of money, but IBM is one of the tech companies that can actually pull off an EMC purchase. While it’s a huge investment, there are massive revenues to realize from a deal of this magnitude. In 2010, EMC brought in $17 billion. If you throw in IBM’s scale on top of that, there’s no telling what kind of revenue they could do together after a deal.

Personally, I think IBM could make it happen. But the move may be a bit too bold for a company that prides itself on focus and on being fairly conservative. On top of that, IBM has already said that it intends to spend “only” $20 billion on mergers and acquisitions in the next five years. An EMC purchase would tear through that and then some. In some respects, however, it’s a deal that might be too good, and pricey, to make happen.

But that’s just my opinion. What’s yours? I’m currently hosting a poll on my blog at Software Advice. Come vote and make your voice heard at: IBM Mergers & Acquisitions: Who’s Next? For reference, EMC is currently in third place. I look forward to hearing from you.

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Big data, schmig data. I know, you’re sick of it. Too bad.

Let’s get right to the trash talk, shall we? A few weeks ago, Netezza CEO Jim Baum (who’s now part of IBM) was telling me about the competitive landscape in “big data” analytics—the software and machinery that businesses are using these days to analyze increasingly huge amounts of data on customers, sales, logistics, and so forth.

While touting Netezza’s products, Baum dished on the shortcomings of other players in the sector like EMC/Greenplum, Oracle, and especially Hewlett-Packard, which acquired Billerica, MA-based Vertica in the data analytics arena last month. Baum pointed out some of HP’s recent struggles in data warehousing and business intelligence. He said the company has suffered “a tremendous brain drain” and that its “talent pool is gone.” He concluded that “HP has completely missed the boat” on big data analytics.

Vertica, whose acquisition by Palo Alto, CA-based HP (NYSE: HPQ) officially closed last week, would beg to differ. Chris Lynch, Vertica’s chief executive, started out by giving me a quip of his own about Netezza. “Their tag line is ‘The power to question everything,’” Lynch says. “So the first question is: why do they need proprietary hardware? The second question is: why are they using a database engine that’s based on technology from 1982?”

Netezza would probably dispute those assertions, but let’s hear Lynch out. In comparison to Vertica’s software-only “next generation architecture,” Lynch says, Netezza’s technology is “like taking an AMC Pacer and putting a turbocharger in it.” He also says Netezza faces “challenges architecturally” and, in its integration with IBM, will have to navigate the “politics of five competing databases” at Big Blue.

Lynch (see left) also defended his own house, pointing out (in response to Baum’s remark about HP’s talent) that Vertica hasn’t lost a single engineer during his year-long tenure or as a result of the acquisition. In that regard, he says, HP’s talent pool is quite strong, thank you very much. What’s more, Vertica is currently hiring top talent across sales, engineering, and product management, he says, and is looking to more than double the size of its Boston-area headquarters to more than 200 workers sometime later this year.

It also sounds like HP is letting Vertica run pretty autonomously, as its own … Next Page »

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[Corrected July 8, 2010, 10:20 a.m.; see below] Boston is already a powerhouse in “big data.” It’s home to companies like Netezza, Dataupia, Vertica, and Lightwolf Technologies, which all help enterprises manage and mine the huge databases used in business intelligence applications. It was the site of the first “Boston Big Data Summit” last fall. And now, with the acquisition of San Mateo, CA-based Greenplum by Hopkinton, MA-based EMC, the region will be even bigger into big data.

Greenplum is probably best known as the provider of the multi-petabyte data warehouse that auction site eBay formerly used to analyze the behavior of site visitors. EBay users generate a reported 150 billion individual event records per day as they skim the site and place bids. That’s information eBay can use to optimize the site’s performance and serve customers better—but doing so requires sifting through trillions of records overall. This huge task requires a massively parallel processing approach, which is what Greenplum’s database software, built on top of the open-source Postgres object-relational database system, is optimized to do. [Update and correction: Oliver Ratzesberger, who is in charge of the analytics platform at eBay, wrote to say that the company now uses a different technology for analytics.]

The main difference between Greenplum’s technology and other database software schemes has to do with how data is accessed. In traditional database management systems built by companies like Oracle and Microsoft, different query processing jobs generally share access to the same hard-drive disks, which can slow down individual queries. But Greenplum’s so-called “shared-nothing” system divides data across multiple servers or segments, each of which has its own connection to a disk drive. That means a single database query can be run against many segments of data simultaneously—perfect for the analytics applications run by Greenplum customers like eBay, Fox Interactive Media, NASDAQ, the New York Stock Exchange, Skype, and T-Mobile.

Announced Tuesday, the all-cash acquisition of Greenplum (terms weren’t given) means that EMC will now have a data computing product division that allows it to compete directly with suppliers of large-scale data warehousing systems like Netezza and Vertica, not to mention database giants like Oracle and Teradata. It’s perhaps surprising that EMC would reach all the way to California for an acquisition in the big-data sector, given that there were several options within Route 128. But it’s easy to understand why EMC would want to be a player in this area, considering that … Next Page »

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Hopkinton, MA-based EMC (NYSE:EMC) announced today that it will acquire Greenplum, a San Mateo, CA-based maker of massively parallel database software for corporate data warehousing and analytics. The size of the all-cash transaction was not disclosed. EMC said Bill Cook, CEO of seven-year-old Greenplum, will head a new data computing product division within the company’s Information Infrastructure business.

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[Updated 1:00 p.m. May 26, 2010] Waltham, MA-based Xkoto, which makes database virtualization software for businesses, has been acquired by Teradata (NYSE: TDC), the Dayton, OH-based data warehousing and business intelligence giant, PE Hub first reported this morning. In an e-mail to Xconomy, Teradata public relations director Dan Conway confirmed the acquisition, and said the companies have no plans to disclose the financial terms of the deal. We first covered Xkoto back in 2007, when Boston-based GrandBanks Capital arranged to transplant the company’s headquarters from Toronto to Boston. Xkoto raised a $7.5 million Series B round in 2007 and a $3 million Series C round in 2009 from GrandBanks and GrowthWorks Canadian Fund.

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As the editor of San Diego Xconomy, I’m as thrilled as the next journalist to say I have electrifying news—and this time it’s almost literally true.

In planning the Xconomy forum on smart energy, now just five weeks away, we’ve asked some of San Diego’s leading luminaries in energy innovation to discuss what they’re doing to develop smarter ways of using energy. We’ve recruited strategic thinkers, such as Terry Mohn of Balance Energy, leading visionaries like Calit2 director Larry Smarr, and startup CEOs like Achates Power’s David Johnson, to enlighten us with their ideas and views, as well as their technologies and startup business plans.

Today, I am pleased to report that the closing keynote speaker of the afternoon will be Eric Giler, CEO of Watertown, MA-based WiTricity, who is overseeing the development of technology that transmits electricity without wires. As I said, it’s electrifying. The technology was conceived by MIT assistant professor of physics Marin Soljačić, who won a MacArthur Foundation “genius grant” in 2008 for his work in this field. WiTricity was named the emerging innovative company of 2009 by the Massachusetts Technology Leadership Council, and it won the audience choice award among startup energy companies in Boston last June at XSITE, the Xconomy Summit on Innovation, Technology, and Entreprneurship. Today, WiTricity is pursuing a host of applications, such as wireless recharging of cell phones, laptops, and other mobile consumer electronics. But another prospective application—recharging electric vehicles—could have major ramifications throughout Southern California.

In addition to WiTricity, we have landed Qualcomm Senior Director of Business Development Manuel Jaime, who will give a case study presentation on technology that Qualcomm is developing to help electric vehicles communicate with the power grid.

As I mentioned last month, when we first announced the Xconomy Forum event on Smart Energy, many of the innovation clusters that already exist in San Diego specialize in technologies that will be needed to help make people smarter about using energy. By providing a glimpse at innovations that lie just over the horizon, the smart energy forum offers an opportunity for people with expertise in IT, wireless communications, data warehousing, and software analytics to understand how and where these new opportunities are emerging.

Our Xconomy Forum is set for the afternoon of June 8 in the Calit2 auditorium at UCSD, and tomorrow is the final day you can buy discounted tickets at the super-saver rate of $75. If the previous Xconomy Forum on San Diego Life Sciences 2030 was any indication, tickets for the 200-seat auditorium will sell out well before the event. Additional information and online registration is available here, and maps and directions to Calit2 can be downloaded here.

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This past Saturday, almost 700 people showed up for Cyberposium 15 at Harvard Business School, arguably the premier student-organized business school technology conference in the world, with past guests including Yahoo’s Jerry Yang, Amazon’s Jeff Bezos, and Google’s Marissa Mayer. The crowd consisted mostly of MBA students and other local students but had significant representation from local technology and venture capital firms.

The morning kicked off with a keynote from Jim Balsillie, CEO of RIM, who posited that RIM’s success to date has largely been driven by its competency in scarcity management—whether the scarce resource is network capacity or battery life or heat dissipation and size. Balsillie’s implication was that many other smart phone manufacturers are not as good at managing scarcity across all of these dimensions, although despite our best efforts, we could not get Basillie to actually use the words Apple or Android.

The conference then split off into five tracks:

• My Life Online, addressing trends in digital media, gaming, lifestreaming, and mobile
• Life in the Clouds, addressing cloud providers, SaaS, and Big Data
• Show Me the Money, addressing search, e-commerce, online advertising, and venture capital
• Changing Landscapes, addressing healthcare, converging devices, and cleantech/greentech
• Start-up Showcase, with talks entitled From PowerPoint to Product and Scaling to Success.

I helped coordinate the Life in the Cloud track, so I ventured first to the Cloud Providers panel. The initial conversation focused on defining cloud computing. With input from Microsoft, Rackspace, VMware, RightScale, and Cloudswitch, we covered all of the usual aspects—elasticity, metering, responsiveness, etc., as well as some less frequently mentioned characteristics such as the presence of APIs and support/service. The focus then shifted to what would inhibit adoption of cloud computing. The panelists didn’t delve into technical minutiae, but rather discussed the concerns of would-be cloud adopters over data security and lock-in, the actual logistics of transitioning workloads into the cloud, and the lack of government policy and regulation around data ownership and discoverability.

Next, at the Killer SaaS Apps panel, we heard much from Zuora founder and CEO and former Salesforce.com chief marketing officer Tien Tzuo. It seems instructive to me that while Salesforce owns its own infrastructure, Zuora own none—Tien points to how this allowed Zuora to minimize expenses and get up and running quickly. Although neither Salesforce nor Zuora hosts tremendously processor- or data-intensive applications, one can only surmise that were Salesforce being built from the ground up today, it would likely not live in an internal datacenter. Tien then went on to explain the success of Salesforce and his own company as being driven by the “Customer Success Department” and churn management. Mike McDerment, CEO of Freshbooks, aptly pointed out that “Customer service is an opportunity, not a cost center.”

The afternoon keynote was a fireside chat with Chad Hurley, co-founder and CEO of YouTube, moderated by HBS Professor Tom Eisenmann. My main takeaway was simply that the TV delivery experience is hugely important in Chad’s mind to the ultimate success and monetization of YouTube. He predicts that “in a few years, buying a TV without Wi-Fi will be like buying a laptop without Wi-Fi today.” The corollary is that YouTube is in quite an enviable position, with a sugar daddy like Google able to give the company the runway it needs to continue focusing on honing the user experience and address monetization in the longer term.

At the Big Data Panel, Michael Stonebraker, the father of relational databases, said the challenge of data warehousing is getting harder. Data is now being generated faster than disk drives are getting cheaper. Over time, Stonebraker said, storage prices will keep going down—but with all this data, knowing what questions to ask of it becomes more difficult. Data visualization rather than sheer storage and/or processing power may become the bottleneck, he said, while fast data retrieval and the velocity of data remain concerns.  In the arms race of the electronic trading world on Wall Street, response times of only 10 milliseconds are too long. The panel ended with a discussion of the future of database management systems: whether easy-to-use, one-size-fits-all offerings will overtake the purpose built systems we see today, and whether retrospective and real-time analysis can all be done from the same system.

To sum up what I witnessed at the Cyberposium, it sounds like all companies, but particularly startups, must become masters of scarcity optimization and user experience. Resources are never infinite, and technology is only as good as the user interface that drives it.

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From all outward appearances, Cambridge, MA-based data warehousing appliance maker Dataupia and its founder Foster Hinshaw have both been through near-death experiences this year. Heart problems forced to Hinshaw to step down as CEO in January. Dataupia’s board brought in not just a new leader, Tony Sirianni, but a new strategy, concentrating on selling software rather than integrated hardware-software packages.

But the strategy didn’t seem to be enough to stave off the effects of the recession: by June, as we reported, the company had laid off the majority of its staff and was seeking new financing in order to stay alive. In August, reports surfaced that the company had been reduced to a skeleton crew and was selling off its assets. Many database industry observers put the company into the dead pool.

But appearances can be deceiving. Hinshaw is back as CEO, the company’s workforce has stabilized at about 30 (half the number from one year ago), and the startup’s difficult period is behind it, according to an announcement set to be released tomorrow. “After taking a hiatus following a medical surgery, [Hinshaw] is back to lead the Company into a high growth phase,” the announcement says.

That “hiatus” language is a bit of a gloss on the actual situation, which I understand much better after having spoken with Hinshaw himself at length today. Most importantly, Hinshaw—who is widely considered to be the father of the data warehousing appliance business—says that he has fully recovered from coronary artery bypass graft surgery. “I’m out hiking now and doing my normal stuff, which is beautiful,” he says. “It was a long recovery, but it’s amazing what they do.”

But Hinshaw also says that while the recession caused some bumps for the company, including the big wave of layoffs, the rumors about Dataupia’s troubles were far out of proportion to reality. “I don’t want to quote Mark Twain, but some folks on their way out may have said some things that were very hypey,” he says.

Like Hinshaw’s previous company, Netezza (which went public in 2007), Dataupia started out selling data warehousing appliances—very fast servers preloaded with the software needed to help companies such as wireless operators sort through terabytes of historical customer data to discern patterns and extract intelligence. And with Hinshaw back in the saddle, that is once again the company’s emphasis.

But under Sirianni’s leadership, Hinshaw explains, the company steered for a while toward selling the software designed for Dataupia’s hardware as a standalone product. The attraction of this strategy was that it necessitated much lower research and development costs, Hinshaw says.

“With an appliance, you can drop it into a customer site and literally within days you are up and running, which is a powerful story, but the R&D costs are fairly high,” he says. “So there is always the question of whether you want to spend on that R&D, or just take the software and let the customer do the integration” into their existing IT systems.

Whether or not the software strategy was justified, it didn’t boost sales in the way the company would have liked, Hinshaw says. A horrid economic climate was at least part of the problem. “I’m not saying that Tony or the board did a bad job. I interviewed Tony myself,” he says. “But the economy certainly didn’t help any of this stuff.”

While there’s ongoing debate within the industry over the “tools” versus “appliances” question, Hinshaw says he’s personally convinced that … Next Page »

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The first meeting of the Boston Big Data Summit was held yesterday. Since the announcement on October 2, the event has had a great reception. Just over a hundred people attended, with an almost even split between “end users” and “vendors.” By a significant margin, the vendors were entrepreneurs or self described “startup types.” Many established players were also represented in the audience.

The program featured a keynote speech by Curt Monash, a leading analyst and strategic advisor to the software industry. This was followed by a lively panel discussion with Ellen Rubin, founder and vice president of products at Cloudswitch; David Cohen, chief architect for the Cloud Infrastructure Group at EMC Corporation; and Larry Dennison, president and founder of Lightwolf Technologies.

The Boston area has long had a tradition of nurturing entrepreneurship in “big iron” and enterprise class products, and the audience yesterday reflected that tradition. Late in September, Bob Zurek and I met to discuss the possibility of setting up this forum. We recognized that there were no technical forums that were geared towards Database Management Systems (DBMS) and Information Management (IM) professionals in the Boston area, and felt that there was an acute need for one.

In setting up the Boston Big Data Summit, we had a simple mission: to create a technical forum for DBMS and IM professionals, and foster innovation and entrepreneurship in these areas, through networking, debate and the sharing of experience. The forums would necessarily be somewhat geeky (that’s what you get when you have two geeks running the show).

The goal was to make them accessible to everyone at no cost. Our sponsors Foley Hoag, Infobright, Expressor Software, and Kalido made the event possible, and we intend to continue to fund this venture through corporate sponsorships.

Yesterday’s event is, hopefully, the first of a regular series of events that we will be organizing. The next event is scheduled for sometime in January, and we would like the one after that, in the spring, to be a day long event with multiple speakers, panelists and discussion areas. The excellent reception to yesterday’s event is a clear indication of the need in this area.

The keynote speech reflected Curt’s extensive experience and depth of knowledge in the field of Big Data, analytics, and the companies and technologies in the space. Curt described the market and provided three different ways of segmenting the market for these products, a segmentation that was the subject of much discussion after … Next Page »

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In 2004, Marathon Technologies abandoned its old hardware business to focus on “fault tolerance” software for Windows servers—programs that switch computing work from one server to another almost instaneously in the case of a hardware failure. Last year, in a move to adapt to the virtualization movement sweeping through the corporate IT world, Marathon brought out software that does the same thing for virtualized servers. Last month, the company raised $7 million in a Series B financing round led by Atlas Venture, Longworth Venture Partners, and Sierra Ventures. And today, the Littleton, MA-based startup is making one more big change: the company has announced that former IBM executive Jim Welch has joined as president and CEO, replacing former CEO Gary Phillips.

Welch tells Xconomy that Marathon has “a terrific technology foundation” that should appeal to more businesses as they stack more and more applications onto virtualized servers—meaning that these systems need to be just as reliable as traditional stand-alone servers. But Marathon hasn’t done a good job of explaining why its products are valuable, according to Welch; he says it’s been more focused on building great technologies than on figuring out what the market wants.

“I think you will see Marathon, under my leadership, very much transformed into a market-led company,” says Welch. “Under Gary’s guidance, the company grew phenomenally, but now it’s time to take that to a whole new level.”

At IBM, Welch was vice president and general manager of the InfoSphere data warehousing business. He’d been at Big Blue since its 2005 acquisition of Ascential Software, where, as vice president of product operations, he’d helped make the company into the leader in the $2 billion electronic data interchange (EDI) market.

Welch says that Marathon, which has 70 employees, will also build on its existing partnerships with Microsoft and Citrix to make its fault-tolerance and disaster recovery software work in more kinds of computing environments. “Today our tech is very much sold and used as a point solution,” protecting Windows servers, Welch says. “But the opportunity in the enterprise is obviously much more broad. I want to see us protecting Exchange servers or fetal heart monitors or whatever it may be. We need to continue to expand our capabilities for a heterogeneous world.”

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Judging from an IDG News report published in PC World on Friday, Cambridge, MA-based Dataupia is spinning down permanently. The maker of high-speed computing appliances for handling large business datasets has gone through yet another round of staff cuts and is putting its assets up for sale, the report says.

Xconomy reported in June that Dataupia had laid off nearly two-thirds of its staff in an attempt to conserve cash while it sought new investors. At the time, Dataupia representatives denied that the company—which has raised approximately $40 million in venture capital from the likes of Polaris Venture Partners, Fairhaven Capital, and Valhalla Partners—was in the process of shutting down. Samantha Stone, then the company’s vice president of marketing, said the existing investors had advised Dataupia to “to seek out additional funding from other sources” and that the company was scaling back operations in the meantime.

Apparently, that search has failed. Stone told Chris Kanaracus of the IDG News Service that the company’s assets are for sale, and that the staff has been reduced to a “small team” working on customer support and searching for potential acquirers. Stone was one of those laid off.

Dataupia did not immediately respond to Xconomy’s request today for confirmation and comment.

Dataupia’s servers are designed to support large-scale data warehousing and data analysis. The company’s founder, Foster Hinshaw, also founded Cambridge, MA-based Netezza, which unveiled a new line of data warehousing appliances this month that are far cheaper than its previous products. Dataupia’s most recent venture infusion, a $10 million extension of the company’s B round, came at the end of 2008.

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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.”

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ParAccel, which has offices in Cupertino, CA, and San Diego, says it has raised $22 million in a Series C round of venture funding. The company provides database management system for data warehousing and analysis.

A new investor, Menlo Ventures, led the round, which included Walden International as well as previous investors Bay Partners, Mohr Davidow Ventures (MDV), and Tao Venture Partners. San Diego’s Enterprise Partners Venture Capital, an early backer of the company, is missing from the round, according to SoCalTech.com. ParAccel board member Tom Clancy is a former managing director at Enterprise Partners and now a managing director at Tao Ventures, which also participated in the round.

ParAccel says the new funding will be used to “expand product development, accelerate sales and marketing and ramp up services and support to manage its rapidly growing customer base.” ParAccel was started in October 2007 by CTO Barry Zane, a former co-founder of Netezza. The Cupertino-based company has previously raised nearly $30 million, and has approximately 60 employees.

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Cambridge, MA-based data warehousing appliance maker Dataupia has laid off nearly two-thirds of its staff and scaled back its operations while it seeks new funders, Xconomy has learned.

We contacted Dataupia today after hearing a rumor that the four-year-old startup had shut down—a rumor that turns out to be exaggerated but not wholly unfounded. “Dataupia is very much still here, still operating, and supporting customers and growing our business,” says Samantha Stone, the company’s vice president of marketing. “We did, unfortunately, lay off a significant number of people, and we did that just a few weeks ago, but we have not closed down operations by any means, and we don’t have intentions of closing down operations.”

Stone said 23 people remain on active duty at Dataupia. She would not comment on how many people were laid off. But a data sheet published by the company in April indicated that Dataupia had 60 employees at that time, indicating that about 37 people have lost their jobs. (We’ve updated the Boston Tech Layoff Tracker accordingly.)

Dataupia sells servers specially designed to handle very large datasets that can be mined for business-intelligence purposes. (An e-retailer or a wireless provider might buy a Dataupia server to help plumb customer transaction records in order to create customized discount offers or rate plans, for example.) The startup’s backers include Polaris Venture Partners of Waltham, MA, Fairhaven Capital of Cambridge, MA, and Valhalla Partners of Vienna, VA. Altogether, the venture firms have put about $40 million into Dataupia; the most recent infusion was a $10 million extension of the company’s B round, closing in the fourth quarter of last year.

The cutbacks at Dataupia are evidently part of what’s becoming a familiar story among venture-backed technology startups: cash runs short, and the original funders aren’t willing to pony up more without seeing some changes, or without having a new investor to help share the load.

“What happened was that some of our investors have asked us to seek out additional funding from other sources,” Stone says. As a result, she says, “We have scaled back our operations so we can continue to support customers and continue to invest in some of the strategic development we had in place. But we basically scaled back all of our marketing initiatives and some of our development stuff, and we’re seeking additional new funding sources so that we can get back on track and grow again.”

The changes at Dataupia are also a marker of how quickly a startup’s financial fortunes can shift. When I last interviewed Dataupia CEO Tony Sirianni in late March, I specifically asked him how much of a financial runway the company had, and whether it would be able to raise a Series C round, should that become necessary.

The investors “would not have brought me on board without giving me the proper ramp-up to make the company successful,” Sirianni answered at that time. “The company brought me on board to scale the organization, and that takes money, and I believe the VCs are going to finance the company appropriately to give me the opportunity to succeed with that. I believe the story is so compelling that if we need to go to yet another [venture] round, whenever that might be, I’m confident we’ll be able to secure whatever we need. That is not a problem I am waking up each morning worrying about.”

Stone says Sirianni was speaking in earnest about the company’s growth plans at that time. “It was our intention to continue doing that and he said that with all honestness,” she says. But as it turns out, some of the company’s backers are now unwilling to contribute further venture funding unless Dataupia can line up additional new investors. Others, meanwhile, may be unwilling to join the round at all. (Stone didn’t identify which investors are which.) “Polaris as well as Valhalla and Fairhaven have been our investors, and some of those would like to continue to invest and are looking for new partners to do that, and others are looking at their whole portfolios,” she says.

Stone asserted that from a sales and marketing perspective, Dataupia has been performing well. The company exceeded its revenue goals for the first quarter of this year, and its server technology has recently won awards from publications such as RedHerring.com and Information Week. “We have accomplished a great deal, and we are looking forward to a chance to augment our financing and get back on track,” she says.

Customers who have bought Dataupia hardware still have a customer support and engineering team to service them, Stone adds.

In other company news, Stone confirmed information obtained by Xconomy that former CEO Foster Hinshaw, who now serves on Dataupia’s board, recently underwent serious surgery for a heart condition. “He has recovered from that and is doing remarkably well, and is an active member of the board of directors,” Stone says.

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Burlington, MA-based Kalido, which makes software that helps companies make better use of historical business data, has secured $5.15 million in Series E venture funding, according to documents filed yesterday with the Securities and Exchange Commission. Existing investors Atlas Venture and Matrix Venture Partners led the round, $3.1 million of which has been collected so far. Mass High Tech first reported the story this morning.

The newest round brings Kalido’s total financing since 2003—when it was spun off by Shell—to about $34 million. President and CEO Bill Hewitt tells Xconomy that the funding is “mostly to strengthen our balance sheet…We do business with a lot of companies and they want to understand that we have enough runway.” Hewitt says Kalido does not expect to burn much of the new capital, and that in fact the company will likely turn profitable and start generating cash this year.

As our March 2008 profile of Kalido explains, customers use the startup’s software as an intermediate layer between their data warehouses—which are usually full of valuable data about past transactions and business performance—and their business intelligence tools, which help them make sense of the data.

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Foster Hinshaw has a theory. The most successful consumer-oriented companies—the Wal-Marts, Amazons, L.L. Beans, and Staples of the world—are successful not just because they understand their customers, but because they can operationalize that understanding. They collect massive amounts of information about past transactions and store it in data warehouses, and they actively mine those warehouses using business intelligence software.

Hinshaw illustrates with a story. “I called up L.L. Bean an hour before the cutoff time for FedEx Christmas delivery. I said, ‘I want this green sweater for my wife.’ This great customer rep says, ‘I’m sorry, that sweater is not in stock in green.’ So I was ready to run out to the mall. But then she said, ‘However, we see that your wife also likes teal, and we do have that sweater in stock in teal.’ Now, I won’t admit it in public, but I didn’t know that my wife liked teal. But somehow L.L. Bean did know that, and once she said it, it was obvious. So she was able to help me with the stuff I needed. That is what you call operational data warehousing and business intelligence.”

Hinshaw pays attention to such episodes because data warehousing has been his life for much of the last decade. In 2000 he founded Marlborough, MA-based Netezza to build data-warehousing appliances that speed up certain kinds of business-intelligence (BI) queries. Netezza’s devices are best for “deep analytics,” Hinshaw says—the kinds of questions that only a handful of PhD statisticians at each big company would even know how to ask. “They represent about 5 percent of the usage pattern in the large data market,” he says.

“But while I was at Netezza, people started asking, what about the mainstream, the other 95 percent, the guys doing routine BI?” Even before Hinshaw left Netezza (which eventually went public, in one of the top-grossing IPOs in Massachusetts in 2007), he started thinking about a new kind of appliance that would be optimized for more mainstream BI queries—questions that don’t require heavy modeling, but do require culling through terabytes of data.

And the result was Dataupia (pronounced day-TOE-pia). The Cambridge company, founded in 2005 and funded by Polaris Venture Partners, Valhalla Partners, and Fairhaven Capital, makes massively parallel data warehousing appliances that combine servers and storage with software designed to speed up BI-type queries. I got an introduction to Dataupia’s technology and its business last September during a visit with Hinshaw, and received an update a few weeks ago from Tony Sirianni, who replaced Hinshaw as CEO in early March. (Hinshaw remains active in the company as chairman of its board and its “main technical visionary,” in Sirianni’s words.)

Hinshaw’s key vision was that BI questions could be answered faster if … Next Page »

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Cambridge, MA-based Dataupia, which makes server appliances designed to handle large volumes of business-intelligence queries, said yesterday that it recently closed a “Series B-1″ financing round building on its $16 million B round in October 2007. The company didn’t say how much extra money it had raised, but a report today in Private Equity Hub, based on a regulatory filing, puts the figure at $10 million.

The company is backed by Polaris Venture Partners, Valhalla Partners, and Fairhaven Capital, and has now raised some $40 million all told. In its announcement, Dataupia (pronounced “day-toe-pia”) highlighted its successes in 2008, which included a doubling of its customer base and enhancements to its Satori Server, which is designed to help companies spot trends in large collections of data such as e-commerce records.

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Marlborough, MA-based Netezza (NYSE: NZ) will today unveil a feature for which users of its data warehouse appliances have long been clamoring: location.

The firm raised more than $100 million in a July 2007 IPO, based largely on the perceived strength of its appliances, which are designed to speed up the complex queries that business managers often need to run against their historical business data. Traditional data warehouses are sundry contraptions, consisting of storage hardware from the likes of EMC or Hitachi, servers from IBM, Sun, HP, or Teradata, and database software from Oracle, IBM, or Microsoft. But Netezza combines all of these elements into one box. And using a combination of technical tricks—such as running queries in parallel against hundreds of segments of a database, and filtering and pre-analyzing data using processors placed directly on storage disks rather than moving it all to main memory first—its devices can complete many types of business-intelligence (BI) queries 10 to 100 times as fast as competitors’ systems.

But until this week, there was one type of data that Netezza’s appliances couldn’t handle at all: spatial information such as latitudes and longitudes. That was a key shortcoming, since more and more business decisions have a location-based component. Cellular providers, for example, need to know where customers have the most trouble with dropped calls before they can decide where to build new cell towers. But for the most part, solving the geospatial parts of such riddles has fallen to specialized geographic information systems (GIS), which evolved separately from most other business software and are set apart by very different ways of storing data—using formats that Netezza’s database couldn’t even read.

So Netezza was, in effect, ceding the spatial information management business—which is expected to generate $5.1 billion in IT revenues per year by 2012, according to research firm IDC—to Oracle, IBM, Microsoft, and other competitors whose database programs offer support for geospatial data types. But at a user conference in Orlando, FL, today, Netezza will announce a software extension that allows its data warehouse appliances not only to handle location-based information, but to do it at the same accelerated rate that they can execute standard business queries.

It’s a feature that Netezza customers have been requesting for years, according to Jonathan Shepherd, the company’s general manager of location based solutions. “What we saw was that in insurance, financial services, telecommunications, retail, online, advertising, and government, customers were primarily using Oracle, which has the largest share of the spatial data market. And they were saying ‘If you could do in our spatial data warehouse what you’ve done in our BI warehouse, we’d be thrilled.’ So we saw an opportunity to merge the two.”

But following through on that opportunity required some help from another local startup, Boston-based Intelligent Integration Systems, Inc., or IISi. A year ago, says Shepherd, Netezza launched a program giving outside software developers the technical details they needed to write applications that would run inside the massively parallel architecture of Netezza’s appliances. IISi was one of the companies that took up this challenge, creating a geospatial toolkit that allowed Netezza’s built-in database to handle data encoded using specifications from the Open Geospatial Consortium, the leading standards body in the GIS field. “We saw IISi’s effort as being applicable across our customer base, so we acquired the technology from them,” says Shepherd.

That’s what the company is unveiling today, under the name Netezza Spatial. It’s also working with other vendors, such as PitneyBowes’ MapInfo location intelligence division and spatial data conversion specialist Safe Software, to make sure that the new technology works with existing BI and GIS software.

Already, at least one Netezza customer is using the spatial extension: New York-based Guy Carpenter, which helps insurance companies balance risks and obtain reinsurance. The company must frequently answer questions such as how many of a client’s subscribers live within a given floodplain or earthquake zone or are likely to suffer storm damage in an approaching hurricane. “Providing real-time, predictive data to our insurance customers is critical when it comes to natural disasters,” Shajy Mathai, a Guy Carpenter managing director, said in a statement. “The combined solution of Netezza, MapInfo and Safe Software provides us the critical tool we need to ensure our customers are getting the most up-to-date information.”

Shepherd couldn’t say exactly how much faster Guy Carpenter can run geospatial queries now that it’s using Netezza’s appliances. “What we’re comfortable saying is that we’re seeing the same order-of-magnitude improvement—meaning 10 to 100 times faster than our customers’ legacy systems,” he says. “We’ll have more case studies as we announce more customers. But the issue Netezza is seeing is that our 200-plus [existing] customers want to capture this data, but it has not been easy to query and derive meaningful analytics. That was really the motivation for us to acquire this technology and make it available.”

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Cambridge, MA-based Good Data wants to do for business intelligence software what Salesforce has done for customer relationship management: put it on the Web and make it easier to use. In theory, that will give more people in an organization the ability to spot business trends and make informed decisions. Today, the 30-person Web 2.0 startup announced that it has collected $2 million in seed funding to test that theory, by turning its prototype into a full production system.

The money comes courtesy of tech-celebrity investors Esther Dyson and Tim O’Reilly, as well as Good Data founder and CEO Roman Stanek and New York-based VC firm Windcrest Partners. Good Data’s focus is “delivering bite-sized, use-as-you-go data analytics that will actually get used by normal people,” Dyson said in a statement announcing the investment. (It’s the third time Dyson has invested in a company headed by Stanek; the first two were Java programming company NetBeans and enterprise software infrastructure provider Systinet.) “I think of it as the data equivalent of an ATM: You can get the value out when and where you need it.”

“Business intelligence” or BI is the general term for the layer of software tools programmers have developed to make sense of, and help executives make decisions based upon, the untamed morass of data that most big companies collect in their transaction-level databases—for example, sales data from a chain of retail stores. The Boston area is a hub of sorts both for BI toolmakers (IBM’s Cognos division, Metatomix, Visual I|O) and for builders of the data warehouse software and appliances that often intermediates between transaction-level databases and BI interfaces (Kalido, Netezza).

Good Data is trying to set itself apart from all of these companies by combining the data-warehousing and business intelligence functions into single service, and offering the whole thing over the Internet, using the Software-as-a-Service (Saas) model pioneered by Salesforce and others. While its software isn’t yet available, a demo on Good Data’s site shows how users can upload raw data to the company’s cloud of servers, then experiment with different ways of arranging, filtering, and visualizing the data using simple, Web-based drop-down menus and drag-and-drop buttons. In the fictional case study used in the demo, a marketing executive is able to sort through historical sales data from a chain of convenience stores to identify the most effective promotional events at each store.

Overall, the analytical part of Good Data’s system seems to work a lot like Microsoft Excel or Google Spreadsheets, but with an attractive Web 2.0 pastel color scheme and, more importantly, built-in mechanisms for workers to access data from their Web browsers and to annotate and share their insights—for example, by saving custom graphs or tables that highlight interesting trends. (Good data is promoting the term “collaborative analytics” to describe this process. Click on the images at left for bigger views of Good Data’s user interface.)

As the company’s software engineers, who are mainly based in the Czech Republic, use the seed funding to get the Good Data tools ready for rollout, the company is collecting names of volunteers for an upcoming hands-on preview.

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Fairhaven Capital Partners, Polaris Venture Partners, and Valhalla Partners have joined in a $16 million Series B funding round for Dataupia, according to a report yesterday at peHUB. The Somerville, MA, startup sells a data warehousing appliance—called “Satori,” from the Zen Buddhist term for deep or lasting satisfaction—that consists of an exandable rack of AMD blade servers, Seagate hard drives, and a massively parallel database engine that connects to standard database management systems from Oracle, IBM, or Microsoft. Dataupia president and CEO Foster Hinshaw is a veteran of Netezza, another data warehousing company that raised $108 million in its July IPO.

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