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September 20, 2010

IBM snaps up analytics appliance maker Netezza

$1.7bn cash paid for $250m business

By Jason Stamper

IBM announced it is acquiring data warehousing appliance specialists Netezza, with a price tag of $1.7bn that shows how keen Big Blue was to get its hands on the firm, which has around a $250m-a-year revenue run rate.

Netezza’s most recent quarter saw revenue of $64m, up 64% year on year, enabling it to raise its guidance for the year and expect 30% annual growth when its year-end figures are counted.

The reason for the deal is fairly obvious: even in these cash constrained times companies want to get better insight into their customers’, suppliers’ or even partners’ behaviour, and Netezza’s warehousing appliances help them to do just that, and faster.

Netezza claims its appliances can be up and running on an organisation’s data within a matter of hours, and handle complex analytical queries 10 to 100 times faster than more traditional systems. The speed and also the ease of use of the appliances is said to enable business people to use these things – not to have to ask the IT department each time they want a query answered.

IBM noted that a recent Global IBM Study revealed that 83% of CIO’s identified analytics as a top priority.

"IBM is bringing analytics to the masses," said Steve Mills, senior vice president and group executive, IBM Software and Systems. "We continue to evolve our capabilities for systems integration, bringing together optimized hardware and software, in response to increasing demand for technology that delivers true business value. Netezza is a perfect example of this approach. Netezza strongly complements our business analytics capabilities and client base. Together, we have the opportunity to quickly leverage the technology and accelerate the offering."

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Netezza claims to have 350 clients including the likes of Time Warner, Estee Lauder, Blue Cross Blue Shield of Massachusetts, United HealthGroup, Nationwide Insurance, Sapporo, NYSE Euronext and Virgin Media. It has 500 staff, while IBM said it has 6,000 consultants of its own dedicated to analytics.

In the last four years, IBM has invested more than $12bn in 23 analytics related acquisitions. In IBM’s second-quarter of 2010, IBM’s analytics business grew 14%.

In a blog in early 2009 CBR noted that Netezza, Greenplum and Kognitio were making waves in the data warehouse acceleration space. Greenplum was bought by EMC in July this year. Microsoft bought rival appliance maker Datallegro back in July 2008.

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